Con­fi­dence in hous­ing mar­ket 'col­laps­ing', NAB sur­vey says

The Guardian Australia - - Headlines / News - Martin Far­rer

Con­fi­dence in the hous­ing mar­ket is col­laps­ing in Aus­tralia’s big­gest states and prices will con­tinue to fall for an­other two years, ac­cord­ing to a sur­vey of prop­erty pro­fes­sion­als.

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 –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 – Queens­land.

Con­fi­dence in the mar­ket was “col­laps­ing”, 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, pro­fes­sion­als’ con­fi­dence slipped 24 points to –5 (its low­est since 2012), while in NSW con­fi­dence hit a new low for the sur­vey, fall­ing 16 points to –25.

NAB’s sur­vey con­cluded that house prices would con­tinue to “cor­rect” over the next 18 to 24 months, with Syd­ney fall­ing around 10% peak to trough and Mel­bourne 8%.

How­ever, NAB said it would not be a “credit crunch event” lead­ing to a col­lapse in prices. “Over­all, 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,” it said. “Our cen­tral sce­nario does not in­clude a credit crunch event lead­ing to dis­or­derly falls in house prices.”

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 fallen 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, said de­mand for hous­ing was down but dis­missed pre­dic­tions that prices in Syd­ney and Mel­bourne could fall by 40%., which an­a­lysed more than 80m prop­erty searches be­tween July and Septem­ber, ad­mit­ted con­di­tions for sell­ers in Aus­tralia’s two most pop­u­lous cities “aren’t great” 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.

Pho­to­graph: Paul Miller/AAP

The down­turn in prop­erty mar­ket sen­ti­ment is driven by big falls in NSW and Vic­to­ria, off­set­ting gains in Queens­land, NAB says.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.