NAB lowers housing forecast as sentiment drops to two-year low: warning on credit

The weaker than expected residential markets in Melbourne, Brisbane and Perth added to continued weakness in Sydney and prompted NAB to reduce its outlook for housing prices this year and next year.

The country's fourth-largest residential lender has deepened the expectation that housing prices will reach 1.8 percent this year compared with a forecast 0.8 percent in April, and it's expected that housing prices will rise to 1.8 percent this year. now expects a minor drop next year of 0.1 percent, in contrast to the expected 0.8 percent gain in single-detached homes. 19659002] NAB, which is also now expecting more severe cuts in unit prices this year and after it predicted it, said that any further tightening of credit – be it dictated by financial regulation or governance – could further worsen the outlook

"Any further tightening of lending standards or any further modification of government or prudential policy aimed at addressing affordability or financial stability issues should have an impact on these predictions Alan Oster

The modified forecasts coincide with the residential property index Q2 of the NAB, which shows that the confidence of real estate professionals has fallen at its lowest level in two years.The forecast comes a day after the separate survey of the ANZ-Property Council of Australia has also showed confidence in the growth of prices of & # 39; real estate and the availability of financing has fallen over the last three months.

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The availability of credit is directly related to the performance of the housing market. New housing investor loans fell to their lowest total in more than two years in May, official figures earlier this week showed. Faced with the caution of lenders, providers must extend settlement times to give their buyers the time to obtain funding approval even for low risk purchases.

In its latest report, NAB indicated that low prices this year and the next, although the falls would be "moderate" rather than "abrupt" and that they would stabilize globally by 2020. This implied a 6.5% decline in Sydney and 2.5% in Melbourne.

The first homebuyers offset some of the losses of foreign investors and buyers in the country's housing markets, with their share of purchases falling from 26.1% to 29%. , 1% three months earlier

. "Moderate housing prices are probably helping first-time buyers gain access to the property scale," Oster said.

The outlook for rents remains positive in all states and is likely to put upward pressure on yields. 02] "Income returns should be the strongest in Victoria, where rapid population growth contributes to low residential vacancy rates," said Oster