Stronger growth in Melbourne & Sydney pushes house prices 3.9-11% in 2016

By @vitthernandez on
Sydney Home
An advertising sign hangs from a fence surrounding a home under construction in the western Sydney suburb of Castle Hill, Australia, June 20, 2016. Picture taken June 20, 2016. Reuters/David Gray

Are Australian property prices going up or down? Experts warned last week that the lull on the country property, especially in Sydney, would last for at least two years, but a new report from National Australia Bank (NAB) says on a quarterly basis there is some improvement.

NAB’s Residential Property Survey for the second quarter reports an uptick in home prices in various Australian cities. Melbourne logged the highest at 12.1 percent, followed by Sydney 11 percent, Brisbane 7.6 percent, Hobart 4.9 percent and Adelaide 3.9 percent.

Across Australia, NAB forecasts house prices will go up faster than the expected 5.1 percent for 2016 because of strong growth in Melbourne and Sydney, reports Australian Financial Review. Three months ago, NAB forecast the annual improvement in home prices would average only 1.5 percent.

But it would still be slower compared to the 7.8 percent growth in 2015. NAB predicts a slower growth of 0.5 percent in 2017. All state capitals are expected to experience slower growth next year, but the slowdown in Perth would be moderate.

In its report, the bank says it maintains its expectation of a cooling market even if there are near-term strength. But it revised upwards the bank’s average national house price forecast for this year. However, NAB adds price growth would likely stall when the fundamentals, such as wages, start to catch up. NAB expects apartment prices to decline in all cities, except Hobart and Adelaide.

However, a separate ANZ/Property Council of Australia (PCA) survey conducted this week says that among 1,600 property professionals, the confidence index has dipped to a three-year low of 128, the lowest level since December 2013, reports The Australian.

Ken Morrison, chief executive of PCA, explains the drop to “the uncertainty created by the longest election campaign in half a century, and recent state government decisions to increase property taxes.”

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