According to NAB’s latest quarterly residential property survey, Victoria saw the biggest increase in its Residential Property Index in 2013’s fourth quarter, replacing New South Wales as the country’s strongest state property market. Housing prices were up in the December quarter by 1.6%, with strong performances by New South Wales and Victoria.
NAB notes that it is more optimistic about the country’s property markets over the next one to two years than most survey forecasts, predicting a rise in average capital city house prices of 6% in the year to end-2014 and 5% in the following year. They attribute their outlook in part to the presence of foreign buyers in the market, who account for 11% of all new property demand.
See how NAB’s capital city house price outlook compares to expectations from surveyed property professionals below.
The bank has revised its outlook for the next two years, softening its prediction of a nation-wide price increase of 3.3% to 2.9% for the next year, with a 3.7% increase tipped for the year after (previously at 4.5%). NAB has lowered its expectations for all states, particularly Western Australia, for the next one to two years, except for Queensland.
Queensland is now expected by NAB to provide the biggest returns in that period. The state saw an increase in the role of local investors in the final 2013 quarter. According to NAB, foreign investors were slightly less active in the December quarter, but still represent a significant portion of the market.
Quarter four saw a moderate increase in demand over all property types, while inner city markets remained the best location in every state. NAB has increased its capital growth expectations for established properties at almost all price points, and the report noted initial signs of recovery in the premium market.
The NAB survey found that housing affordability concerns and credit availability were the main factors constraining housing development, while employment security was regarded in most states as the biggest impediment to purchasing existing property. According to the report, concern over price levels and the lack of stock on the market is also increasing among buyers.
By Jessie Richardson