In a recent survey conducted by the NAB respondents have downgraded their expectations for house price growth for the next year.
With rising interest rates and all the mixed messages in the media this is not surprising. Here are some highlights…
* Australian house price expectations for the next 12 months have slipped significantly, with the national average now sitting at +1.4% down from +5.2% recorded in the March quarter.
* Following very rapid growth over the past 12 months, Melbourne has seen the most notable change, leading last quarter’s expectations at +5.8% but now finishing last nationally at +0.7%.
* Adelaide (2.2%), Sydney (2.1%), Perth (2.0%) and Brisbane (0.8%), have all seen expectations fall over the past quarter.
* Canberra, whilst also having fallen from +5.1% last quarter to a current +2.9%, is now leading the way for national house price growth expectations.
* Foreign buyers are expected to account for almost 9% of all purchases of existing housing over the next 12 months.
* The balance is split between Australian owner occupiers (46.8%), investors (29.3%) and first home buyers (13.3%). The percentage of buyers expected to be in the market for new developments largely mirrors these results.
* Properties traditionally favoured by first home buyers ($250,000-$500,000), are expected to realise the highest percentage capital growth over the next 12 months, for both housing and apartment stock. In contrast, homes and apartments over $2 million are considered the worst investment options (perhaps impacted by share market volatility) according to our survey participants.
* Demand for existing property is expected to favour houses (both semis and stand alone) in the middle and outer suburban rings, closely followed by inner city detached and semi detached product. Demand for new developments mirrors these results. Apartment stock is not expected to drive strong demand within the current development cycle, particularly outside of the city/CBD area.
* In terms of rental expectations, SA and Victoria were considered the top States for rental growth over the next 6 and 12 months (between 2.3% – 2.4%), with NSW, WA and QLD expected to record 1.6% – 1.9% growth and the ACT a distant last at 0.3% growth.
* When asked to consider the major constraints on new housing developments survey participants overwhelmingly believe tight credit to be the major area of concern within the current market. This was followed by rising interest rates.
* By contrast, rising interest rates were considered to be the major constraint in buying existing residential property, followed by access to credit and level of prices.
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