Property professionals are confident price growth will accelerate in all states with NAB’s residential property index climbing to its highest level in nearly six years.
For the first time since early 2018 sentiment was positive in all states, supported by the rebound in house prices in the past three months.
Confidence was strongest in Victoria, most improved in NSW and positive results from WA suggest the local market could be emerging from its long downturn.
NAB economists said the results would be a mixed bag across the country but would improve overall.
Property professionals also thought price growth would overtake rents for the first time in two years, suggesting yields would compress in the future.
NAB chief economist Alan Oster said they expected first home buyers to dominate in sales and increase their share of established markets for two major reasons.
“The new First Home Buyer Loan Deposit Scheme [is] taking effect from January 2020,” he said.
“Foreign buying activity was again relatively subdued.”
Oster added low interest rates and improved levels of employment would further support new buyers however affordability was still an issue.
NAB Economics house price forecasts (%)
^ Source: NAB economics, Corelogic
Oster expects nationwide dwelling prices to rise by around 4 per cent in 2020 before slowing to around 2.5 per cent in 2021.
“While prices have rebounded more strongly than expected in the second half of 2019, dwelling price growth will slow,” Oster said.
“Sydney and Melbourne to continue driving price growth, with modest outcomes forecast in all other capitals.”
Tight credit remained the biggest constraint on new housing development, and access to credit the biggest impediment for buyers of existing property .
“Property professionals indicated their impact on the market was less severe in the final quarter of 2019,” Oster said.
The NAB residential property index is a gauge of housing market sentiment based on expectations of property professionals for prices and rents.