Ratings agency Fitch is out with its latest Global Housing and Mortgage Outlook, focusing on Asia-Pacific markets where unsurprisingly, its only forecasting nominal house price growth of 2% in Australia and 4% in New Zealand.
In Australia, this is down from an average of 8% annual growth in 2013-2015 across the eight capital cities, according to CoreLogic RP data.
Stretched affordability and further compression of rental yields are likely to be key factors driving down price growth in Australia. This is especially the case in Sydney and Melbourne, where price appreciation in recent years has outpaced wage growth – leading to decreasing levels of affordability. Weaker demand from investors has also already begun to affect mortgage demand, as falling rental yields and new prudential measures restrict the growth of investment loan portfolios.
In New Zealand, a supply shortage will continue to drive growth in Auckland, but this will be offset by recent restrictions on low-deposit lending by the central bank and rising unaffordability for owner occupiers. In regions outside Auckland, Fitch expects low-to-static growth in house prices.
So, no negative growth then. Phew.