NAB trims forecast for growth

NATIONAL Australia Bank has cut its forecasts for growth in house and unit prices this year, citing softer market sentiment.

Releasing the results of its latest residential property survey yesterday, the bank trimmed its forecast for house price growth this year from 7.2 per cent to 5 per cent.

It cut its projection for growth in unit prices from 6.8 per cent to 3 per cent.

NAB analysts expect house prices to grow more slowly next year, at 4.3 per cent, and units by 0.3 per cent.

Chief economist Alan Oster said low interest rates and pent-up demand in some areas still supported the housing market, but its robust run could be nearing an end.

Mr Oster echoed an ensemble of experts now forecasting a gradual “cooling phase” on the back of several years of very strong price growth.

“Our expectations around subdued wages growth remain, suggesting affordability will be a major constraint on the market, especially if credit conditions continue to tighten,” he said.