Capital city prices set to hit wall
NATIONAL Australia Bank has cut its house price forecasts, saying prices are likely to drop in Sydney and barely lift in Melbourne this year amid highly indebted households and concerns over the cost of living.
The bank expects house prices across the capital cities to drop 0.8 per cent on average this year, after earlier predicting a rise of 0.7 per cent.
Sydney house prices were expected to fall 3.4 per cent, with Melbourne tipped to edge just 0.1 per cent higher, the bank said.
For apartments, the bank expects a 0.8 per cent drop across the capital cities, with a 1.6 per cent fall in Sydney and a 1.2 per cent rise in Melbourne.
“Looking forward it’s hard to see a near term rebound in Sydney and Melbourne house prices, especially given consumer concerns over the cost of living and high levels of household debt,” NAB chief economist Alan Oster said.
“Strong performances in Tasmania and to lesser extent in regional areas, along with higher confidence in the West and Queensland won’t offset the aggregate effects of lower prices in Sydney and Melbourne.
The forecast comes as the once-heated east coast capitals have been softening, with the Sydney market down 2.1 per cent over the past 12 months, according to property researcher CoreLogic.
But the NAB Residential Property Index still managed to rise three points to +23 in the March quarter, buoyed by a jump in sentiment in the resources affected markets.
Confidence in Western Australia reached positive levels for the first time in four years, while Queensland sentiment also rose.
The share of first home buyers reached a high point for the survey while the proportion of resident investors hit a new low. The share of foreign buyers among new markets rose to 10.9 per cent in the quarter, after falling to a six-year low of 8.4 per cent.