Quarterly Australian Residential Property Survey – Q1 2014

Housing market sentiment lifted slightly in Q1 2014 as sentiment improved in SA/NT and NSW, but softened in Victoria and WA. The outlook for house prices strengthened in all states except Victoria, with Queensland showing the biggest gains in the next 1-2 years.

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Housing market sentiment lifted slightly in Q1 2014 as sentiment improved in SA/NT and NSW, but softened in Victoria and WA. The outlook for house prices strengthened in all states except Victoria, with Queensland showing the biggest gains in the next 1-2 years. A big pick up in foreign buying activity was noted in the market for new property (especially in Queensland) and for established housing (especially in NSW). In terms of total demand, foreign buyers now account for just over 1 in 7 new properties and around 1 in 10 established homes.

  • NAB Residential Property Index rose +1 to a high of +37, with strong gains in SA/NT and NSW offsetting declines in Victoria and WA. Queensland is the most optimistic state in the next 1-2 years, with confidence scaled back most in Victoria and weakest in WA.
  • The outlook for house prices in the next year (end-March 2014) improved in all states, bar Victoria. Price growth tipped to be fastest in Qld (3.5%) and NSW (3.3%) and slowest in Victoria(2.2%) and SA/NT (2.2%). Qld (4.4%) set to lead the country for capital gains in 2 years time, with Victoria(2.4%) slowest. Continuing modest rental growth indicates that yields are falling.
  • NAB also sees house prices rising fastest in Brisbane (6.4%) and Perth (5.6%), while lagging in Adelaide (3%) and Melbourne (4.3%) in the year to March-2015 (see Appendix 1 for more detail).
  • The influence of foreign buyers rose significantly in both new and established property markets, reaching a high of 13.9% and 9.5% of total demand respectively in Q1 2014. Foreign buyers were especially active in Queensland (accounting for an estimated 24.4% of new property market demand) and in NSW (12.7% of demand in the established property market).
  • Demand for all types of new property weakened slightly, although it is still very strong in NSW. Credit availability and housing affordability continue to be identified as the biggest impediments to buying new property, but concerns over interest rates are beginning to rise.
  • Demand for established property was stronger in all market locations and segments, except for middle/outer ring low rise apartments. Demand for established property is expected to soften slightly next year in all markets, except for CBD apartments and inner city houses.
  • Capital growth expectations improved at the premium end of housing market, led by NSW and Victoria, but overall prospects are strongest for houses and apartments worth less than $5000,000.
  • Employment security is still identified as the biggest impediment to buying existing property in all states except NSW, where a lack of stock is seen as the biggest impediment in the market place.

For further analysis download the full report.