NAB sharply upgrades property price forecasts

NAB has sharply upgraded its 2017 property price forecasts after a survey showed confidence in the Australian housing market striking a three-year peak. The developments follow news earlier this week of capital city dwelling prices rising at their fastest annual clip in seven years for the 12 months to March 31.

Today’s release of the March quarter NAB Residential Property Index revealed a 16 point-lift to a three-year high sentiment reading of +31 on swelling sector confidence in both valuations and rental growth prospects. The latest results paint a picture of a very resilient market and came despite ongoing concerns about housing affordability, supply, the labour market, persistent warnings of a correction and speculation of more official measures to reign in lending to housing, NAB chief economist Alan Oster said. The most elevated readings were unsurprisingly found in New South Wales and Victoria, where the booming markets of Sydney and Melbourne have seen price appreciation of over 15 per cent across the past 12 months.

“NSW and Victoria also remain very upbeat, but WA continues to languish,” Mr Oster said. That confidence stems partly from a lift in price appreciation expectations from 1.2 per cent to 1.8 per cent for this year.

NAB simultaneously delivered a markedly sharper revision to its own forecasts for 2017 house price growth. House prices are now tipped to surge 7.2 per cent — as against an earlier call for 3.4 per cent — while unit prices are anticipated to advance 6.8 per cent — a sharp swing from earlier guidance for depreciation of 0.8 per cent. The bank foresees the eastern capitals continuing to drive price growth through this year and next, with double-digit gains anticipated in both Sydney and Melbourne in 2017.

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