NAB: What the experts are predicting for markets and investors
The latest NAB Residential Property Index saw overall market sentiment rising for the March quarter, and exceeding expectations, which could dictate how property prices move in the next few years. Investor sentiment may be rocky in the short term, but there’s a silver lining.
Speaking to 300 experts, the market sentiment index currently stands at +23, nine points higher than the long-term average at +14, which, according to Alan Oster, NAB chief economist, is showing an “ongoing shift in sentiment across states” and could be indicative of the direction the market follows.
A change in sentiment was recorded the strongest in Western Australia with a rise of 20 points to 7, compared to last quarter, with a predicted rise of 36 points expected this time next year.
Following this was Queensland with a rise of 13 points to 31, with a predicted rise next year of 16 points to 47.
New South Wales, Victoria, South Australia and the Northern Territory, however, saw sentiments decline, with the two former markets being driven down by weakening house prices, from 36 and 18 last quarter to 30 and 15 this quarter, respectively.
Mr Oster said that survey house prices for the next 12 months are for the most part reflecting these trends, with Western Australia leading the way for the highest jump in expected price growth rising by 0.6 per cent to 1.3 per cent, while Queensland is expected to be the top-performing state or territory for capital growth at 2 per cent. South Australia and the Northern Territory bucked their sentiment trend, rising by 0.3 per cent to 1.8 per cent.
Meanwhile, New South Wales is predicting a larger price fall of 0.9 per cent, while Victoria’s sentiment, which is still above the average but declining, has resulted in its expectations to be scaled back but still a positive result of 1.3 per cent.
According to Mr Oster, the number of first home buyer residential investors is up at 13.1 per cent of the total market share and accounted for 11.1 per cent of all established property sales; while other investors are at a survey low of 15.8 per cent and accounted for 17.9 per cent of all established property sales, which is the fourth quarterly decline in a row.
Out of all the states and territories, the largest fall of investing was recorded in Sydney at 6.7 per cent to 13.3 per cent, and declining nearly everywhere else. The only state and territory-based rise was recorded in Victoria, by 0.3 per cent to 19.4 per cent.
Mr Oster said that the cause of this is APRA’s crackdown on investor lending, which has been said went to extreme measures and has largely pushed investors out of the market.
However, the polled property experts believe that investor presence will rise in the next 12 months.
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