FHBs increase their presence in new property markets in Q1 ’16: NAB

FHBs increase their presence in new property markets in Q1 ’16: NAB
FHBs increase their presence in new property markets in Q1 ’16: NAB

First-home buyers, both owner-occupiers and investors, were more active in new property markets in the March quarter (around one in three of all sales) but pulled back a little in established markets, according to NAB's Quarterly Australian Residential Property Survey Q1 2016.

FHBs (owner occupiers) increased their presence in new property markets in Q1’16, with their share of total demand rising to 19.1% nationally (18.3% in Q4), with these buyers more active in NSW (21.9%) and QLD (12.9%), the survey showed. The share of FHB (investors) also rose to 14.4% (10.9% in Q4) and increased in NSW (17.9%), QLD (16%) & VIC (8.2%). In total, FHBs accounted for 33.5% of all new property demand in Q1’16 (29.2% in Q4).

Owner occupiers (net of FHBs) were less active in all states (except WA) with their share of national demand falling for new property falling to 27.6% (30.4% in Q4). In contrast, local investors (net of FHBs) were more active, accounting for 24% of new property demand (22.5% in Q4). They were particularly active in VIC where they accounted for 43.8% of total demand (25% in Q4). The share of foreign buyers in new property markets continued to recede, falling to 11.8% of total demand - its lowest level since mid-2014. Foreign buyers were notably less prominent in VIC (10.7%), NSW (11.1%) & WA (2.9%), but played a bigger role in QLD (21.9% vs. 20.9% in Q4).

FHBs increase their presence in new property markets in Q1 ’16: NAB

Expected demand for new property by type and location

Expectations for new property demand in the next year are stronger for most types of property and in all locations (except middle/outer ring high rise apartments) but weaker than year earlier levels, says the survey. Property professionals are anticipating “good” demand across the board, except for apartments located in the middle/outer ring (“fair”). By state, property professionals see “very good” demand for CBD apartments in NSW and for inner city low rise apartments and houses in QLD. In contrast, their expectations for all types of new property demand in WA are “fair” (except inner city houses). They are also anticipating “fair” demand for CBD and high rise apartments in the middle/outer ring and inner city VIC, and for low rise apartments in the middle/outer ring in NSW.

Constraints on new housing development

Housing affordability replaced tight credit as the biggest constraint for new housing development, particularly in VIC (“very significant”). Tight credit is the next biggest issue (especially in SA/NT), followed by sustainability of house price gains (mainly in VIC, NSW & QLD) and construction costs (mostly in VIC & SA/NT).

Established property

When it came to established property, the share of FHBs (owner occupiers) in established property markets fell to 17.6% in Q1’16 (20.2% in Q4), with these buyers less active in all states except QLD. FHBs (investors) were, however, more active in all states (except WA), with their market share falling to 8% (8.7% in Q4).

Owner occupiers (net of FHBs) accounted for 42.5% of total new property demand in Q1’16 (40.7% in Q4), with these buyers more active in all states except QLD. The share of local investors (net of FHBs) in the market also rose to 20.5% in Q1’16 (up from a Survey low 19.2% in Q4’15), with investors more active in all states except WA.

The share of foreign buyers fell to 7.2% in Q1’16 (8.6% in Q4). Moreover, these buyers were less prevalent in all states, except WA where they accounted for a survey high 8.8% of the market (7.2% in Q4). Elsewhere, their share of demand fell to 7.1% in VIC (8.6% in Q4), 7.8% in NSW (9.4% in Q4) and 6.7% in QLD (8.9% in Q4).

 

FHBs increase their presence in new property markets in Q1 ’16: NAB

Expected demand for established property by type and location

Expectations for established property demand over the next year are mixed, says the NAB survey. They are tipped to strengthen for houses and low and high rise apartments located in the middle/outer ring, but weaken for all other properties. Overall demand is however expected to be “good” for all types of property. By state, property professionals see “good” demand in NSW for most types of property, except inner city houses (“very good”). In VIC, “good” demand is expected for all property except CBD apartments and high rise apartments in the inner city and middle/outer ring. In QLD, demand is tipped to be “good” except for CBD apartments and middle/outer ring high rise apartments (“fair”).

Property professionals in WA anticipate “fair” demand for all types of established property in the next 12 months.

Constraints on established property

Property professionals continue to view employment security as the biggest impediment to buying existing property nationally and in most states (especially in WA & SA/NT) but somewhat less than in Q4. Access to credit was again identified as the second biggest constraint, led by SA/NT. Property professionals also saw house price levels as a “significant” constraint (especially in NSW, VIC and SA/NT), and more so than in Q4. Concerns about rising interest rates have however receded and are now considered only “somewhat significant” in all states.

 

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First Home Buyers Nab

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