NAB has released its property market survey for the December quarter of 2013, which revealed an ongoing lift in sentiment, supported by faster house price growth.
The NAB Residential Property Index, which measures sentiment amongst 290 property market professionals, rose 4 points (+12.5%) to 36 points – the highest reading since the survey began. As shown below, Victoria recorded the biggest increase in sentiment and replaced New South Wales as the strongest state. Victoria and Queensland are also the most optimistic about the next 1-2 years, whereas sentiment in Western Australia has been revised down heavily.
Expectations around house prices have softened, and are now tipped to rise by 2.9% in next year (down from 3.3% previously) and by 3.7% in following year (down from 4.5% previously), with expectations lower in all states except Queensland, which is now expected to provide the biggest returns in next 1-2 years (see next chart).
Overall expectations around rental growth have weakened, with rents likely to struggle to track inflation over the next two years (see next chart).
The survey suggests that local investors played a bigger role in the new property market in Q4, especially in Queensland, with foreign investors slightly less active but still representing a significant part of the market (see next chart).
Finally, concern over housing affordability and credit availability were identified as main factors constraining new housing development, although the level of concern around credit has faded significantly over the past year.
Similarly, employment security is still viewed as being the biggest impediment to buying existing property in all states (especially Victoria and Western Australia), although concerns are also growing about price levels and the lack of stock.
The full report can be downloaded here.
