As per the latest survey by National Australia Bank Limited (ASX: NAB), the housing price forecast has been further slashed for Sydney and Melbourne and this is happening for the second time in about four months. It would be true to indicate that the confidence of property experts has been on doldrums given the so called collapse being cited for two largest cities of Australia. The country’s fourth largest lending bank has raised concerns on the property price landscape as the confidence is dying to new low levels. Other key areas of concern are highlighted to be NSW and Victorian property scenarios as there was a pull back in property price outlook for them as well. Pertinently, Victorian property prices have been said to be at low levels against what was expected earlier. The confidence of NSW and Victorian property professionals was noted to be at seven-year low level and this has now broadened the drop to about 3.7 per cent for the year while it was estimated to be witnessing a fall of 1.8 per under the earlier forecast of July 2018. Further, NAB has indicated that the 1.7 per cent fall that was earlier expected in unit prices is now slated to be around 3 per cent. Thus, key states of Australia are now seen to be under pressure with concerns on reduced accessibility to credit prevailing the sentiments.
It has been further stated that property price correction for Sydney might continue for another one and a half years to about 2 years with Sydney falling around 10 per cent from peak to trough and Melbourne witnessing a dip of 8 per cent. It would be needless to say that improvement that Queensland expects to see will be offset by the downtrend being seen in the above two largest cities. It is not just NAB that has come up with such a forecast; in fact, the lender joined the league that earlier was seen to have forecasters from ANZ bank and Macquarie Group. All of this emanates from the price weakness related to apartments with supply coming under the claws of tighter lending restrictions, thus impacting settlement and discounting process.
This wave of negative sentiments has been reflected by the NAB residential property index that recorded lower levels in terms of market prospects. The melancholy outlook comes amidst the exacerbating fears on US-China trade war and many experts are seen to be turning bearish on many economic indicators.
On the other hand, NAB iterated this downfall to be a healthy correction as the household sector driven risks might get managed given the economic scenario at large. Excluding any event related to credit crisis, NAB’s current scenario represents a very muddled picture of house prices. This also does not find support from the earlier swamping of housing sales to foreign investors with respective share of total sales dropping to a seven-year low of 8.1 per cent in new markets and survey low of 4.1 per cent in established markets, as per NAB.
Given the prevailing scenario, we see the sentiment on housing market to be dwindling but some experts, such as those from Realestate.com are still canning the predictions of a significant slash of prices for the next two years or so.
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