Property Market Confidence ‘Collapsing’: Survey

Tightened lending restrictions and rising interest rates has pushed property industry confidence levels to a seven-year low as weakening house prices in NSW and Victoria weigh heavily on the market. According to an industry pulse check released by NAB, confidence fell sharply for the second straight quarter with Sydney and Melbourne, the twin engines of Australia’s house price boom, the key drivers of uneasy sentiment and &quot;collapsing&quot; market confidence. APRA&#x27;s lending curbs and the fallout from the banking royal commission have received the lion&#x27;s share of the blame, with housing confidence dipping to new lows. Sydney prices are now 6.2 per cent lower than their July peak, while Melbourne, which peaked in November, has fallen 4.4 per cent. This was especially acute in Victoria where house price falls are now tipped to be much bigger. To date, the weakness has been concentrated in houses, with the declines in apartment prices less severe. Related: Weak Market Conditions to Impact House Prices: Report NAB Hedonic House Price Forecasts (%) City 2016 2017 2018f 2019f 2020f Sydney 10.7 2.1 -5.7 -1.6 0.1 Melbourne 9.5 9.1 -5.9 -2.2 -0.6 Brisbane 2.7 3.1 0.2 0.0 0.0 Adelaide 3.8 3.3 0.9 1.7 1.7 Perth -2.9 -2.6 -2.4 -0.2 0.0 Hobart 9.6 12.9 6.4 1.8 1.8 Cap City Avg 7.3 4.0 -3.7 -1.0 0.0 NAB’s residential property index forecast that house prices would continue to “correct” over the next 18 to 24 months, with Sydney falling around 10 per cent peak to trough and Melbourne 8 per cent. “NSW had gone from the top of the ladder to the bottom,” Property Council NSW executive director Jane Fitzgerald said. ANZ and Property Council of Australia&#x27;s seperate survey revealed similar declines to property industry confidence with NSW dropping 14 index points from 134 to 120 over the quarter and 27 index points over the 12 months to December 2018. The survey assessed the views of more than 900 participants, including owners, developers, agents, managers, consultants and government – across all major industry sectors around the country. Across Australia, prices have fallen for 11 months in a row with fewer active buyers within the market leading to higher inventory levels and reduced competition. “A combination of tighter lending, a slower residential market and lower economic growth expectations have driven lower sentiment,” Fitzgerald said. “What we do not want is for this lower sentiment to result in lower housing supply.” “We have been building more homes over the past five years to meet growing demand however this must continue; the housing targets outlined in the Greater Sydney Commission’s plans must be met and then we must set more for the next 6-10 years. Related: Residential Approvals at Lowest Levels in Two Years NAB Hedonic Unit Price Forecasts (%) City 2016 2017 2018f 2019f 2020f Sydney 5.8 5.4 -3.6 -5.5 -0.9 Melbourne 4.7 8.4 -2.7 -3.4 -1.0 Brisbane -3.0 -1.2 -0.5 -4.5 -2.2 Adelaide 0.6 0.5 1.2 0.5 0.5 Perth -6.3 -0.9 -6.9 -2.3 -0.8 Hobart 6.4 9.1 5.9 1.2 1.2 Cap City Avg 3.5 5.1 -3.0 -4.4 -1.0 The gloomy outlook for the once soaring property market has not all been bad news, with falls in NSW and Victoria offsetting gains in Queensland. The NAB survey of more than 300 property professionals revealed sentiment in Queensland had improved and is forecast to lead the country for house price growth in the next 12 months, with prices increasing by 0.8 per cent. Perth has weakened again recently after showing some signs of stabilisation. The other capitals and regional prices have generally held up better over the past year. Hobart continues to be the exception with prices up 9.3 per cent over the year, though conditions appear to be moderating there too. The index also highlighted that the boom in Australian housing sales to foreign investors has also run its course. Overseas share of total sales has fallen to a seven-year low of 8.1 per cent in new markets and a survey low of 4.1 per cent in established markets.

Property Market Confidence ‘Collapsing’: Survey

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