The residential property index of the National Australia Bank (NAB) hit a new low in the last quarter of 2018 – down 11 points to -20. The index is now well below its long-term average level (+12).
"This very bad result was not surprising considering what is happening on home prices," said Alan Oster, chief economist at NAB.
Victoria (VIC), down 21 to 28, and New South Wales (NSW), down 13 to -50, led to the decline in the overall index due to the worsening of price degradation in Melbourne and Sydney.
The NAB study also found that confidence was well below average, which means that market dynamics could ease further.
The feeling is down in Queensland, but it's the only state to display a positive reading – from 13 to +8. The sentiments of South Australia and the Northern Territory, as well as those of Western Australia, remained virtually unchanged at very low levels.
In the future, real estate professionals expect larger price declines in New South Wales and Victoria over the next two years, while should remain unchanged in the rest of the country.
NAB predicts that home values ​​will decline even further in the next year or so. This takes into account decreases of almost 15% in Melbourne and Sydney, from one summit to the other.
Perth will probably record small declines, while other states will remain stable. The setbacks are expected to remain orderly and price movements on the east coast are considered to be a healthy correction to the previous sharp rise in prices, NAB said.
The adjustment to date has been in a relatively healthy macroeconomic environment and it is likely that this adjustment will be maintained.
"That being said, further tightening of credit conditions and lower price expectations in the investor market could probably weigh more on prices," said Oster.
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