ANZ, one of the nation’s biggest banks, predicts that prices in Sydney and Melbourne are set to fall 10 per cent as the nation faces a property correction, however, Brisbane will be “insulated” from the storm.
A report released by the ANZ Bank discloses that it expects that Brisbane’s improving economy and population growth will “soften the extent of near-term price falls” weaker than expected. The housing market will be driven by tighter credit and higher interest rates
ANZ senior economist Daniel Gradwell said Brisbane was in a much better position than Sydney and Melbourne, with home prices likely to stabilise, not fall, in 2019. “Brisbane hasn’t seen the same growth, so it’s likely to be insulated from that,” Mr Gradwell said. Despite the doom and gloom around Brisbane’s inner-city apartment market, Mr Gradwell said oversupply concerns were no longer warranted, with attached dwelling completions reaching a peak in 2017.
“Even though there’s still a strong pipeline of work in 2018 and 2019, the worst of that supply increase is behind us,” Mr Gradwell said. “We’re seeing demand is picking up now because Brisbane and the rest of Queensland’s population growth are really improving, and confidence is pretty strong and that’s likely to accelerate.
So good news for property investors in Brisbane! New figures from SQM Research show the rental vacancy rate fell to 2.9 per cent in May, the fifth straight monthly decline. “We believe that a rise in interstate migration is lifting population growth rates in Brisbane plus the peak in unit completions is creating this turnaround in the rental market,” SQM Research managing director Louis Christopher said.
ANZ Bank has downgraded its outlook for house prices. This comes as official figures released by the Australian Bureau of Statistics in June show residential property prices fell 0.7 per cent nationally in the first three months of the year led by the two biggest cities. Sydney recorded the third straight quarter of falling property prices (-1.2 per cent) and the first annual price fall (-0.5 per cent) since the March quarter of 2012, while Melbourne home prices fell 0.6 per cent. Brisbane home prices also declined 0.6 per cent during the quarter, but they are up 1.6 per cent on the same time last year.
Brisbane home prices have only weakened modestly. ABS chief economist Bruce Hockman said regulatory changes and tighter lending conditions had continued to impact investors, who were more active in the Sydney and Melbourne markets than Brisbane. “These cities have seen strong price growth over recent years particularly in detached dwellings,” Mr Hockman said.
Investing is predominantly about the facts and figures,
In its report, ANZ said “weakness in Australia’s housing market has persisted longer than we expected” and now sees the RBA starting to increase rates in August 2019, not May as originally predicted, with a second rate rise in November.
The bank expects home prices around the country to fall by 4 per cent in 2018 and a further 2 per cent in 2019.
The Reserve Bank of Australia kept interest rates on hold at 1.5 per cent at its last board meeting, however, ANZ’s head of Australian Economics, David Plank, believed this would not derail Australia’s economic outlook because it reflected a regulatory-induced tightening in the supply of credit rather than tighter monetary policy. “We think, as a result, that the impact on the economy will be less pervasive,” he said.
David Plank, Head of Australian Economics at ANZ. Source: Linkedin.
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