NAB predicts a bleak few years for investors, noting that “While some prudential measures potentially have their greatest (dampening) impact on the market early on, before losing their potency over time, we may see a more lingering impact this time around, especially in Sydney.” The bank warns that the impact of interest-only borrowers moving to principal and interest loans is not yet apparent.
Owner occupiers – excluding first home buyers – fell slightly from 32.8% to 30.7% of total sales in Q4. However, property experts expect the proportion of new residential buyers to increase over the next 12 months. Owner occupiers with low LVRs are being targeted for discounts by the banks.
Bad news Sydney property owners; after paying the highest prices in the nation to get on the property ladder, you can now expect the value of your home to fall. NAB predicts a decline of 2.4% in 2018 and 1.2% in 2019. If that wasn’t bad enough, every other capital city in Australia is set for growth, particularly Melbourne (3.7% in 2018).
The number of foreign buyers is now at a six-year low in new property markets and a five year low in established markets. For all the fears of foreign buyers scooping up off the plan apartments, fewer than one in 10 new properties were bought by a foreign buyer in the fourth quarter of 2017.
First home buyers who choose to rent out their first property, labelled ‘rentvestors’, have been impacted by restrictions on investor lending, NAB suggests. The share of sales going to rentvestors fell from 13.7% in Q3 2017 down to 9.9% in Q4. According to NAB, “this may also suggest more FHBs are preferring to buy homes to live in as price growth slows.”
With expected house price growth of 1.8% over the next 12 months, the Sunshine State could beat both Melbourne (1.6%) and Sydney (-0.5%) when it comes to expected returns. Over the next two years, prices are expected to rise by 2.4%.