Market Watch: NAB report forecasts house prices for 2016

The latest quarterly NAB report forecasts moderating prices next year; with one exception… Aussie housing is among the world’s most overvalued… Land sales slowdown in NSW and WA… Australian households take on more debt…

Market Watch: NAB report forecasts house prices for 2016
NAB report forecasts moderating prices next year; with one exception
The latest quarterly property report from the National Australia Bank forecasts that home prices will continue to grow for the rest of this year and then slow down in 2016 in most areas; with a notable exception. NAB says that prices will increase by 4.4 per cent nationally this year with Sydney leading the pack (up 7.7 per cent) followed by Melbourne (6.2 per cent), Brisbane (3.8 per cent), Perth (0.7 per cent) and Adelaide (0.4 per cent). In 2016 the report says that prices would generally start to slow especially in Sydney and Melbourne as affordability becomes more of an issue. It remains to be seen if prices moderate enough to help first home buyers get on the ladder. Brisbane is predicted to see strong growth next year.

Aussie housing is among the world’s most overvalued

The Economist says that Australia’s housing market is overvalued by more than 25 per cent. The magazine named Australia along with the UK and Canada as being ‘notable’ for having an overvalued housing market. The metrics it uses include home-value-to-rent ratios and prices relative to after-tax income. House prices compared to rents are 60 per cent overvalued. Compared with income prices are 39 per cent too high.

Land sales slowdown in NSW and WA
Sales of residential land in New South Wales and Western Australia have slowed according to a new report. The Housing Industry Association-Core Logic RP Data Residential Land Report reveals that the two states which were driving home building are now becoming sluggish, although prices continue to rise. Victoria and Queensland land sales are stagnant, as they have been for the past two years. Infrastructure charges, planning delays and zoning restrictions are being blamed for the slowdown, especially in the capitals.

Aussie households take on more debt
Australians are adding extra credit card debt to personal finances according to new figures. Credit card provider Veda reports that demand for cards is up 13.5 per cent in the past year, driven by lower interest rates. The firm found that consumer confidence is also increasing the demand for credit cards. It may add to concern from the central bank that households are taking on too much debt but Australia isn’t alone in banks keen to increase the numbers of credit cards. With mortgage lending being highly competitive due to low interest rates the banks are finding other ways to boost profits.