Confidence in housing market 'collapsing', NAB survey says
Housing affordability Confidence in housing market 'collapsing', NAB survey says
Property professionals in NSW and Victoria concerned at falling prices and reduced access to credit
Confidence in the housing market is collapsing in Australiaâs biggest states and prices will continue to fall for another two years, according to a survey of property professionals.Australian house prices dragged down 2.7% by Sydne y and Melbourne Read more
The NAB residential property index released on Wednesday also recorded a sharp fall in sentiment about the prospects for the market for the second quarter in a row and is down 15 points to a seven-year low of â"9 points, its first negative read since mid-2012.
A day after the IMF downgraded its forecast for the Australian economy amid growing fears of a US-China trade war, the NAB survey paints a gloomy outlook for the once soaring property market.
The fall in sentiment was driven by big falls in New South Wales and Victoria, NAB said, offsetting gains in the only state recording a positive outlook â" Queensland.
Confidence in the market was âcollapsingâ, NAB said, again pulled down mainly by the big two states where property professionals scaled back their outlook for prices. This was especially acute in Victoria where house price falls are now tipped to be much bigger.
In Victoria, professionalsâ confiden ce slipped 24 points to â"5 (its lowest since 2012), while in NSW confidence hit a new low for the survey, falling 16 points to â"25.
NABâs survey concluded that house prices would continue to âcorrectâ over the next 18 to 24 months, with Sydney falling around 10% peak to trough and Melbourne 8%.Following the money: where China's $40bn investment in Australia is going | Greg Jericho Read more
However, NAB said it would not be a âcredit crunch eventâ leading to a collapse in prices. âOverall, we see this as a healthy correction which will help offset some of the risk in the household sector against a backdrop of a relatively healthy economy and labour market,â it said. âOur central scenario does not include a credit crunch event leading to disorderly falls in house prices.â
NAB also said the boom in Australian housing sales to foreign investors has also run its course, the survey said. Overseas share of total sales has fal len to a seven-year low of 8.1% in new markets and a survey low of 4.1% in established markets.
Market professionals told NAB that access to credit was now much more difficult than it had been for years and many were concerned about the impact of rising interest rates on demand.
On the same point, analysis by the investment bank UBS on Wednesday questioned whether there was enough credit available to buyers for the housing industry to sell the record 229,000 homes now under construction.
But two other surveys released on Wednesday had more optimistic findings.
The Westpac/Melbourne Institute survey of consumer sentiment index rose by 1% to 101.5 in October (a reading above 100 denotes optimism).
In another snapshot of the housing market, Realestate.com said demand for housing was down but dismissed predictions that prices in Sydney and Melbourne could fall by 40%.
Realestate.com, which analysed more than 80m property searches between July an d September, admitted conditions for sellers in Australiaâs two most populous cities âarenât greatâ but that demand would be enough to prevent a hard landing.
The Australian share market was flat on Wednesday lunchtime after hitting a four-month low on Tuesday.Topics
- Housing affordability
- Australian economy
- Business (Australia)
- Housing market
- House prices
- Real estate
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