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New forecasts suggest property price growth is about to slow significantly, which may cool the recent housing bubble speculation.
NAB Group Economics’ predictions of a major slowdown in Sydney and Melbourne come in the same week that LF Economics triggered debate with a claim that Australia is suffering the “largest housing bubble on record”.
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NAB forecast that Sydney house prices will increase 10.0 per cent in 2015 and 5.0 per cent in 2016. That compares to a current growth rate of 16.4 per cent, according to the most recent CoreLogic RP Data figures.
Melbourne house prices are forecast to rise 6.2 per cent in 2015 and 3.5 per cent in 2016, compared to a current growth rate of 9.8 per cent.
Brisbane is currently growing at 3.2 per cent, and has been forecast to slow to 3.0 per cent in 2015 before climbing to 5.0 per cent in 2016.
Perth house prices are currently growing at 1.0 per cent, but are expected to decline by 2.5 per cent in 2015. Prices are then expected to remain flat in 2016.
Adelaide prices are forecast to grow 0.4 per cent in 2015 and 0.5 per cent in 2016, compared to a current growth rate of 3.5 per cent.
Across Australia, house price growth is expected to be 6.4 per cent in 2015 and 3.8 per cent in 2016.
NAB said the slowdown would be caused by “rising unemployment, sluggish household income growth, affordability concerns – especially in Sydney and Melbourne – cost of living pressures and still-high levels of household debt”.
Australia’s eight capital cities are currently growing at 9.6 per cent, according to CoreLogic RP Data.
The statistics form a report prepared by NAB and CoreLogic RP Data – the winter edition of the 2015 Australian Housing Market Report – designed to be easily understood by consumers.
NAB said brokers will have access to the report ahead of a broader release to mainstream and retail channels, in a move to empower brokers and further demonstrate the bank’s commitment to the third-party channel.
“We wanted to give brokers an exclusive first look [at] our Housing Market Report so they can use it as a tool and resource to start insightful conversations with their customers and add value to the home purchasing journey,” NAB Broker general manager Steve Kane said.
“We understand the strength of the relationships brokers have with their customers, and it’s important we support brokers with information and resources as a way of showing our commitment to the channel.”
[Related: Sydney property values growing twice as fast as Melbourne’s]
