Sentiment and confidence in the New South Wales and Victorian housing markets has dropped, with a “clear shift in momentum” away from the eastern states to the rest of the country, according to the National Australia Bank’s (NAB) Residential Property Index.
In NSW, the index fell from 31 in Q317 to 18 in Q417, with the index also dropping in Victoria from 63 in Q317 to 36 in Q417.
The national index remained stable at 20, as a result of improvements in Queensland (from 16 to 18), South Australia/Northern Territory (10 to 38) and Western Australia (-31 to -13).
“Trends have [been] mixed in recent quarters, and the latest survey showed a clear shift in momentum from the key eastern states towards the rest of the country,” NAB chief economist Alan Oster said.
Further, first home buyers (FHB) have ramped up their activity in the housing market, with NAB reporting that FHBs accounted for two in five purchases in the new housing market, and one in three purchases in the established housing market.
The research also reported a marked reduction in foreign interest in the Australian housing market, with foreign buyer activity in the new property market dropping to a six-year low of 8.4 per cent, and a five-year low of 5.5 per cent in the established housing market.
“Clearly, the efforts of policymakers, both domestic and offshore, to stem the tide of foreign capital entering Australian property markets are bearing fruit,” Mr Oster said.
Moreover, NAB has forecast housing price growth in all capital cities (excluding Sydney), where negative growth of 2.4 per cent is expected in 2018.
According to NAB, national house prices are set to increase by 0.7 per cent in 2018, led by Hobart (4.9 per cent) and closely followed by Melbourne (3.7 per cent). Brisbane and Adelaide are both expected to record 1.9 per cent price growth, while Perth’s market is set to begin a “gradual turnaround”, with positive growth of 0.7 per cent expected in the Western Australian capital.
However, national unit prices are expected to drop by 0.9 per cent in 2018, with units in Sydney and Brisbane predicted to experience the largest price decline (1.8 per cent).
Mr Oster noted that NAB’s forecasts are subject to change if governments implement policies to address housing affordability pressures.
“Naturally, any additional changes to government or prudential policy to address affordability or financial stability concerns are likely to have an impact on these forecasts,” the chief economist said.
Charbel Kadib is the news editor on the mortgages titles at Momentum Media.
Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.