The plunge in Australian house prices is nothing new, it has been falling consistently since last 11 months and is expected to continue drifting lower.
The property prices on the way down may be good news for buyers but the question is what drives this downturn. This comes after the expectation of increasing credit cost, making it difficult to afford houses at debt.
The Australian economists’ team of Australia and New Zealand Bank forecast a decline in home prices by 4% this year followed by additional 2% drop in 2019. It said Australia’s home prices are likely to tip further over the next couple of years until 2020 at the back of tighter lending standards and expected rise in home loan interest rates by Reserve Bank of Australia (RBA). Sydney and Melbourne, one of the high housing valuations markets in Australia, are expected to lead the national decline which could lead to 10% fall from their peak level.
Amid the expectation of having increased number of home loan borrowers, the regulatory body APRA along with the leading banks of Australia focus to tighten the limit on high loan-to-income borrowers. The Banks are keeping track of high debt-to-income borrowers to introduce limits that could deeply cut the borrowing capacity of the ones who are already in debt.
The market spots several bears speculating a further decline in home prices. Some forecast mild short term downswing while others are expecting a big crash in property prices. The headwinds have come to this level that even the positive sentiments are taking a turn around.
The ongoing rise in disposable income ahead of increasing job vacancies in Australia, outlines another significant reason for slump in property. Today, September 27, 2018, the Australian Bureau of Statistics reported that job vacancies witnessed the rise of 2,40,900 jobs in the month of August 2018 implying a quarterly rise of 3.4%.
Among the major players, Westpac Banking Corporation (ASX: WBC) recorded 0.719% fall on September 27, 2018 while Australia and New Zealand Banking Group Limited (ASX: ANZ), Commonwealth Bank (ASX: CBA) and National Australia Bank Limited (ASX: NAB) witnessed the fall of 0.608%, 0.142%, and 0.437%, respectively.
While housing market has been on doldrums lately, it is to be seen how the economic indicators pave the path to further shifts.
The Income available from dividends remains attractive for many investors.
We take a look at the best yields on the market and assess what they say about a company’s prospect.
One Thing is certain, though, Australia interest rates are still low, making income difficult to come by and keeping the focus for many investors on high yielding stocks. Kalkine’s team of analysts bought you handpicked report for “Top 25 Dividend Stocks For 2018.”
ASX-relevant Special Reports are published year-round to provide a detailed analysis into an investing opportunity or a potential risk to your portfolio.
Click here to get your free report.
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkinemedia.com and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.