Housing market sentiment strengthened significantly in Q3, according to NAB’s latest Quarterly Australian Residential Property Survey, underpinned by an acceleration in house price growth in every state except Western Australia.
The major lender is also predicting faster price growth in the near future, led by New South Wales and Queensland, but says gains are expected to be ‘relatively modest’. Demand has improved for all types of new and established property and NAB says industry professionals continue to cite tight credit and employment security as the key obstacles to buying.
NAB’s Residential Property Index rose 17 points to +32 points in Q3 - the second best result since the survey began. NSW saw the biggest improvement, with Victoria the next best state. A big improvement was also noted in Queensland, while Western Australia was the only state reporting weaker sentiment. The bank expects Queensland and Victoria to emerge as the strongest states over the next two years.
National house prices rose 1.3% over the quarter, with faster growth in all states except Western Australia. Capital values were up most in New South Wales (1.9%) and Victoria (1.5%), Australia’s two largest housing markets.
“Property professionals are also more optimistic in regards to future house price growth. National house prices are now tipped to rise 3.3% in the next year and 4.5% in next two years, with stronger outcomes in all states,” reads the report.
NAB’s view of the market is, however, slightly less optimistic than the survey, with rising unemployment expected to dampen house price growth over the outlook period.
“NAB sees capital city house prices rising by 3.5% in the year to September 2014 and 3% in the year to September 2015.”