Login
ISCOVER
House prices are slowing across Australia, the major bank has warned during an economics webinar.
NAB’s outgoing chief economist Alan Oster has said that annualised house prices across Australia in the last six months have slowed and a significant uptick in house building remains unlikely in the short term.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
In an interview during the NAB Commercial Broker Economics Webinar on 25 February, Oster said that while house prices in Perth had remained more resistant to decreasing, growth across all states had slowed.
The outgoing chief economist (who is retiring at the end of March after almost 33 years with the bank) singled out Victoria and NSW as states where house prices have slowed a lot.
Victoria under the spotlight
In his final address as NAB’s chief economist, Oster told Chris Thomas, executive, NAB commercial broker and equipment finance, that the Victorian property market was still under pressure.
Oster said that consumer confidence, house price growth, and unemployment were worse than other states.
He said: “On the property side, the government is more exposed to residential prices than any other state. So [it’s] not in a good space.”
Oster said state tax laws were having an adverse impact on prices.
“Part of the problem in [the] property space is you put land taxes up and people just want to sell. Because, if you suddenly inherit your family home somewhere and you are also inheriting a $60,000 a year land tax bill, you sell,” Oster said.
Housing supply isn’t a short-term fix
In a Q&A session, Thomas asked whether more developer activity could help fill the gap of Australia’s housing shortage.
Oster was sceptical: “Can I see it happening in the next three years? No, because one of the issues that we’re also seeing is that private sector developers are saying: the cost of getting inputs has basically gone sideways, but it’s not coming down, so I can’t make a profit.
“I can get the tradesmen now, which in the past I haven’t been able to. But I still can’t make a profit. So we’re quite worried about private sector investment in dwellings. It’s gone backwards at present.”
Looking ahead, Oster said that change could be some way off.
“You talk to the developers and some of them are just saying I’m not building anything until 2029,” he said.
“I think it will take a while but I’m optimistic. If we don’t, that’s a big issue.”
Housing affordability has been a hot topic at the moment, with the government falling behind ambitious construction targets and a raft of recent policies announced by political parties aimed at boosting housing supply and affordability.
The Coalition last week pledged to reform prudential settings, including by adjusting serviceability requirements and expanding business lending, if it were to gain power this year.
This month, the Albanese government also announced a two-year ban on foreign investors buying established homes to improve housing supply.
A new NAB chief economist
Sally Auld will succeed Oster as chief economist on his retirement. She began in the role on a transition basis on 17 February. She was previously the chief investment officer at JBWere.
Recognising Oster’s legacy, which began in 1992 and has helped create NAB’s respected economics function, NAB group chief financial officer, Nathan Goonan, said last month: “Alan Oster’s decision to retire marks the end of an era for NAB. He has been hugely influential through his thoughtful commentary and analysis and has been a trusted adviser to many.
“His expertise and views, particularly through the NAB Business Survey, are highly sought after by our bank, our customers, government and policy makers. We are grateful for his service and wish him the very best in his well-deserved retirement.”
[Related: New home builds rise, but housing target remains elusive]
JOIN THE DISCUSSION