Quarterly Australian Residential Property Survey – Q1 2013

Housing market sentiment rises across all states except Queensland. NAB Residential Property Index climbs sharply as more property professionals report capital and income growth. The out-performance of WA continues, but there was a big turnaround in expectations in Victoria. All states …

By

Housing market sentiment rises across all states except Queensland. NAB Residential Property Index climbs sharply as more property professionals report capital and income growth. The out-performance of WA continues, but there was a big turnaround in expectations in Victoria. All states report stronger price and income growth in next 1-2 years.

  • NAB Residential Property Index rose sharply to +35 points in Q1’13 (+8 points). WA was the stand-out, but a big turnaround in Victoria. NSW also stronger. Queensland down slightly and replaced SA/NT as weakest state in Q1’13. SA/NT to emerge as the leading state in next 1-2 years (but volatile), followed by NSW and WA.
  • National house prices increased by 0.4% in Q1’13 according to the survey. Prices rose in all states except Queensland(-0.4%). Property professionals see faster house price growth in next 12 months (2.2%), but state variance is still apparent. WA (3.8%) is the most optimistic state. Victoria (2.4%) and NSW (2.2%) the next best, with Queensland(1.3%) weakest. The survey panel is predicting a 3.6% rise in national prices in next 2 years, led by WA (5.4%) with Victoria(3.8%) the next best.
  • NAB modelling indicates capital city house prices will grow 1.7% through the year to Q1’14 and 2.4% in the year to Q1’15 – below the survey forecast. Price growth is strongest in Perth(4.2% and 3.7%). Adelaide(0.0% and 1.2%) and Melbourne (1.1% and 1.6%) the weakest markets. See Appendix 1 for details (page 7).
  • With rental markets generally tight across the country, national rents grew 1% in Q1’13. The leasing market was strongest in WA (2.4%), underpinned by the resource-led surge in population growth. Rental growth was slowest inVictoria(0.3%) where residential vacancy was highest nationally. National rents are expected to grow 2.6% next year and 3.6% over 2 years, with returns expected to be strongest in WA, with Victoria lagging.
  • Owner occupiers are the main players in new property market, but investors – Australian and foreign – are also growing. A marked improvement in demand apparent for all types of new property but overall demand still relatively weak. Inner city the most preferred location for new buyers. Participants in new property market are still citing tight credit and affordability as “significant” constraints on new development but less so than in Q4’12.
  • Improved affordability drew more first home buyers into the existing property market in Q1’13, especially in WA. Stronger demand for existing property was also noted in all locations and for all property types with demand strongest for inner city and middle/outer ring houses. Capital growth expectations in the next year are strongest in the sub-$500,000 range, but improvements across all price levels. Employment security remains the biggest impediment for buyers of existing property in all states except WA, where a lack of stock is the biggest concern.

For further analysis download the full report.