UBS calls property boom over and lowers national price growth forecast from 7 to 5 percent

Just months after UBS called the top of Australia’s property market, the investment bank has now declared the housing boom is “officially” over.

In the wake of the latest home price figures for October, its economists forecast a “persistent and sharp slowdown” unfolding in response to lending restrictions and out-of-cycle mortgage rate hikes.

The weakness in auction clearance rates, and the near flat month-on-month growth in prices in the last five months, "suggest the cooling may be happening a bit more quickly than even we expected.”

UBS expects the Reserve Bank of Australia to keep the official cash rate on hold until the second half of 2018.

CoreLogic’s latest monthly read on home values found price growth was flat nationally during October and up just 6.6 per cent annually — the weakest pace of growth since 2016.

Values fell half a per cent in the nation’s biggest housing market, Sydney.

“This is broadly consistent with our housing deep dive ‘calling the top’, which forecast a moderation to 7% year-on-year by end-2017, before dropping further to 0-3% year-on-year in 2018,” UBS economists George Tharenou and Carlos Cacho said.

Now the duo have downgraded their growth forecasts for this year to just 5 percent.

“Australia’s world record housing boom is ‘officially’ over after a large ‘upswing’ of 6556% price growth in 55 years,” he says.