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The NAB Residential Property Index dropped by seven points to +10 in the September quarter – its second consecutive fall – with the index now below its long-term average of +14 points.
However, NAB chief economist Alan Oster said the overall picture is “not all negative”, with some big differences in market sentiment across state markets.
Sentiment improved the most in South Australia/ Northern Territory, rising 21 index points to -21, while Queensland saw a 17-point increase to +28.
Western Australia’s market sentiment remained in negative territory, dropping five index points to -61, while sentiment dropped by seven points to +43 in New South Wales, and by 18 points to +31 in Victoria.
Expectations for national house price growth dropped by six percentage points to 1.5 per cent for the next 12 months, and by five percentage points to 1.8 per cent for the next two years.
The research also revealed that foreign buyers were the more prominent in the market during the September quarter, accounting for around 16 per cent of total demand for new housing and nine per cent for established housing.
NAB noted that more foreign buyers purchased higher-priced properties in the quarter, particularly in NSW and to a lesser extent Victoria.
“This may have been influenced in part by continued house price growth in Sydney and Melbourne as well as a weaker Aussie dollar,” Mr Oster said.