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Housing market sentiment up in December quarter, with NSW brightest: NAB
Housing market sentiment improved in the December quarter, with market participants now forecasting a modest 0.4% drop in house prices over 2012 compared with expectations of a 1% annual decline in the September quarter, according to NAB’s Quarterly Australian Residential Property Survey.
The outlook is brightest for New South Wales and Western Australia, with respondents forecasting growth of 0.8% and 0.1% respectively.
However, expectations for WA have dropped significantly since the last survey (the previous forecast was for growth in WA of 1.5%), which respondents attributed to “global uncertainty impacting on buyer confidence”.
According to NAB, the relative strength in NSW market reflects “the underlying lack of housing and associated costly rental market”.
The national average is being be held down by continued price weakness in Victoria (-1.3%), South Australia/Northern Territory (-1.2%) and Queensland (-1%).
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The market is forecast to perform more strongly in 2013, with the NAB survey forecasting national house prices increasing by 1.2% by December 2013, compared with the previous quarterly forecast of 0.5% growth for the same time period.
By 2013, Western Australia is forecast to be the strongest market, with house price growth of 3.2% while Victoria is expected remain the weakest market with growth of just 0.3%. This is still a marked turnaround from a drop of 2.1% forecast in the previous survey.
Demand for all types of existing property strengthened slightly in the December quarter, while prospects for capital growth continue to be significantly stronger in the more affordable sub- 500,000 market than in the higher end of the market.
However, inner-city housing remains the only property type where demand is considered to be marginally “good”, led by strong demand in NSW. Demand for all other property types was categorised as “fair”.
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First-home buyers’ share of existing property rose slightly to 20% (up from 18% in the third quarter) “suggesting that lower interest rates and improved housing affordability may also be drawing new buyers into this market”.
“First home buyers were seen as being most active in NSW and least active in SA/NT,” says NAB.
The survey found that demand from Australian resident investors for existing property was unchanged at 21%, although investment demand was somewhat stronger in WA and Queensland.
Overall, the NAB’s Residential Property Index – which is a combination of house price and rental expectations – moved back into positive territory in the December quarter with a reading of +1 point, after negative readings of -14 points in the third quarter and -5 points in the second quarter.
“This turnaround was supported by an improvement in overall market conditions in all states,” says NAB.
NSW (+31 points) and WA (+18 points) were the only markets recording a positive index with Victoria (-22 points) the weakest market, though up from -35 points in the third quarter.
Sentiment also improved in Queensland, though still in negative territory, rising from -40 in the September quarter to -18 in December.
According to NAB, the state is still feeling the impact from last year’s natural disasters.
The quarterly survey, which NAB has been conducting since April 2010, is based on a large external panel of respondents comprised of real estate agents/managers, property developers, owners/investors, asset/fund managers and valuers.
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