Australia’s housing market is expected to soften further, with price growth and rents scaled back in most states, according to a sentiment survey released by National Australia Bank.
Queensland has overtaken New South Wales as the most optimistic state, the NAB residential property survey for the three months to September found, with the state also tipped to lead the country for price and rent growth over the next year.
But NAB economists, separately, have forecast average national house price growth of 9.1 per cent over 2015, higher than expected earlier in the year.
“In an environment where income growth continues to be modest, these rates of growth are unlikely to continue, suggesting price growth will slow in 2016,” Alan Oster, NAB’s chief economist, said.
“Additionally, regulatory changes to address perceived risks in housing credit, particularly investor credit, are likely to have at least some impact on housing demand, even if only at the margin.”
The survey -- which takes in real estate agents, property developers and fund managers -- also found foreign buyers continued to maintain their strong activity in Australia’s residential property market, accounting for 19 per cent of new apartment sales and nine per cent of sales in established housing.
But first-home buyers are also increasingly active, largely due to a jump in NSW, according to the NAB economists.
First home buyers accounted for 16.4 per cent of new property sales in the past quarter, up from 14.7 per cent in the three months to June.
Difficulty in obtaining credit overtook housing affordability and construction costs as the biggest impediment to new housing development, the survey found, while employment security and pricing is the biggest constraint against sales of established property.
The report comes as the Housing Industry Association reported new homes sales had declined by 4 per cent in September, with activity now 5.2 per cent lower than the April peak.
“The deterioration in credit conditions is likely to weigh more heavily on new home building activity beyond (this financial year),” HIA economist Diwa Hopkins said.
“We have therefore pared back our forecasts for activity over our forecast horizon beyond the end of the current financial year.”
This article first appeared in The Australian Business Review