Broadly positive sentiment to the Australian property market is consistent with predictions of moderate price growth for houses in 2017, says a new report from National Australia Bank.
This sentiment, found in the NAB Residential Property Survey
“suggests that participants in the property market don’t agree with some of the forecasts out there for large falls,” the bank’s head of Australian economics Riki Polygenis told Australian Broker
This bubble scenario was unlikely anyway without a significant increase in the unemployment rate or interest rates, neither of which would be likely to occur soon, she said.
Looking forward, the NAB report predicted an average house price growth of 1.3% over the next two years: slightly lower than the 1.4% rate in the previous survey.
“We have revised some of our house price forecasts for the major markets largely as a nod to the current strong momentum that we’re seeing in those markets. But we do expect quite a substantial moderation in price growth nevertheless in 2017.”
Victoria stood out as the best state for capital gains with an average 2.0% house price growth over the next few years. NSW (1.4%) came next followed by Queensland (1.5%), SA/NT (0.8%), and Western Australia (0.6%).
NAB analysts expect falls in apartment prices in markets experiencing greater supply including Melbourne, Brisbane and Perth.
The report also found that first home buyers made up 33.1% of all new property sales in the fourth quarter last year. This includes 19.6% owner occupiers and 12.2% investors and is up from 31.2% in the previous quarter.
“The fact that a lot of first home buyers are now investors may play into the affordability conversation because this perhaps suggests that it’s more affordable for first home buyers to buy an investment property rather than an owner-occupied property,” Polygenis said.
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