NAB change property price correction forecast after confidence collapses
NAB have suggested the orderly correction in house prices will continue over the next 18 to 24 months, with Sydney units falling around 10 percent and Melbourne houses over eight percent.
NAB’s change in forecast comes after their current market sentiment survey dipped to a seven year low and confidence collapsed.
Confidence in the NAB Residential Property Index in July saw confidence fall to its lowest level since mid-2016.
Its recent release is its first negative read since mid 2012, when the property price boom began.
"Weakening house prices in New South Wales and Victoria weight heavily on the market," NAB's chief economist Alan Oster said.
In July NAB forecasted a fall of 3.7 percent in the Sydney housing market this year. Now they suggest it will be a 5.7 percent decline.
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Melbourne's housing market has seen the biggest forecast change. Predicted to drop 2.3 percent over the year in July, they are now forecast to decline by 5.9 percent, even greater than Sydney.
Unit prices in Sydney have now been tipped to decline twice as much as they were forecast to in July.
NAB predicted a 1.6 percent decline, which they have changed to a 3.6 percent drop.
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Oster says the dwelling declines are a healthy correction.
"Overall, we see this as a healthy correction which will help offset some of the risk in the household sector against a backdrop of a relatively healthy economy and labour market," he said.
"Our central scenario does not include a credit crunch event leading to disorderly falls in house prices."
Joel Robinson
Joel Robinson is a property journalist based in Sydney. Joel has been writing about the residential real estate market for the last five years, specializing in market trends and the economics and finance behind buying and selling real estate.
