House prices in Australia will continue to rise in all but one Australian capital city next year, though it will be at a much slower pace than what has been seen in recent times.
According to NAB’s Residential Property Survey for the June quarter, 2016 is set to see stronger than expected price growth, before a dramatic slowdown in growth eventuates in 2017.
The survey’s results show that NAB has revised its growth prediction for 2016 and expects house prices to grow by 5.1% during 2016 after their March quarter survey predicted growth of just 1.5%.
The increased growth expectations have been driven by continued strength in Sydney and Melbourne, which have seen double-digit growth in the year to June.
“Our upwards revisions in price forecasts reflects the strength in prices to date. Over the last six months, Sydney and Melbourne prices have increased by an annualised rate of nearly 19% and 12% respectively,” NAB chief economist Alan Oster said.
“However, while there is significant amount of uncertainty over the outlook for prices, we expect that this renewed momentum in the housing market is unlikely to be sustained over the longer term,” Oster said.
After prices grew 7.8% in 2015, 2016 looks to be close to the end of the growth cycle as house price growth of just 0.5% is predicted for 2017.
According to NAB, affordability issues will impact demand from local buyers, while property tax increases will impact demand from foreign buyers, while construction levels indicate that there is likely to be strong supply of new housing in coming years. READ MORE