Australia: Housing market sentiment jumped to a 3-year high in 1Q2017 - NAB

The research team at NAB, notes that the Australian housing market sentiment jumped to a 3-year high in the first quarter of 2017 as the NAB Residential Property Index rose +16 to +31 supported by more positive expectations for house price and rental growth.

Key Quotes

“According to NAB Group Chief Economist Alan Oster, “The latest results paint a picture of a very resilient market and came despite ongoing concerns about housing affordability, supply, the labour market, persistent warnings of a correction and speculation of more official measures to reign in lending to housing.”

“Market sentiment improved to survey high levels in NSW (+58) and Victoria (+58), and remain highest in the country. But there were also encouraging gains in other states.”

“Large gains were reported in SA/NT (+42) along with modest gains in Queensland (+13). Sentiment is still negative in WA (-43) but has improved appreciably from survey low levels reported in the last survey” said Mr Oster.”

“Overall confidence levels have also lifted, with the Index now expected to rise to +38 in the next year (from +30) and to +40 in two years’ time (from +33).”

“Confidence improved most in the under-performing markets of Queensland and SA/NT. NSW and Victoria also remain very upbeat, but WA continues to languish” said Mr Oster.”

“On average, surveyed property experts have lifted their price expectations to 1.8% in the next year (from 1.2%) and 2.0% in two years’ time (from 1.3%).”

“Expectations have been revised up in all states except WA (unchanged), with Queensland and SA/NT expected to out-perform” said Mr Oster.”

“The latest NAB survey suggests that the share of foreign buyers in Australian housing markets was largely unchanged in both new and established property markets in the March quarter.”

“Foreign buyers accounted for an estimated 10.8% of all new property sales nationally (10.9% in Q4’16) and 7.2% of all established property sales (7.6% in Q4’16).”

“But property experts observed a noticeable decline in foreign buyers of new property in Victoria to around 14% from over 19% in final quarter of 2016” said Mr Oster.”