NAB Group Economics has lifted its national house price forecasts for 2017 to 3.4% (previously 0.4%). Unit price forecasts were also revised up, to 0.8% for 2017 (was -1.6%).
NAB Group chief economist Alan Oster said, “Solid market sentiment in the NAB Survey and a surprisingly strong price response to lower interest rates in 2016 has prompted us to revise up our 2017 forecasts, given NAB’s expectation for more rate cuts this year.
“However, we still expect the housing market to cool noticeably in 2017, especially for apartments” said Oster.
‘Considerable uncertainty’ still hangs over the outlook for dwelling prices, the survey said while supply concerns and affordability is are still major issues in the best performing markets.
Considering all of these factors, conditions are expected to soften going forward, contributing to more moderate price growth in the major property markets this year.
“Importantly though, we continue to hold the view that residential property prices are unlikely to experience a severe ‘correction’ without a trigger from a shock that leaves unemployment and/or interest rates sharply higher – a scenario not included in our forecasts” said Oster.
World’s biggest real estate buyers are suddenly short on cash
China’s escalating crackdown on capital outflows is sending shudders through property markets around the world.
In London, Chinese citizens who clamored to purchase flats at the city’s tallest apartment tower three months ago are now struggling to transfer their down payments. In Silicon Valley, Keller Williams Realty says inquiries from China have slumped since the start of the year. And in Sydney, developers are facing “big problems” as Chinese buyers pull back, according to consultancy firm Basis Point.
“Everything changed’’ as it became more difficult to send money offshore, said Coco Tan, a broker at Keller Williams in Cupertino, California.
Less than a month after China announced fresh curbs on overseas payments, anecdotal reports from realtors, homeowners and developers suggest the restrictions are already weighing on the world’s biggest real estate buying spree. While no one expects Chinese demand to disappear anytime soon, the clampdown is deterring first-time buyers who lack offshore assets and the expertise to skirt tighter capital controls.
“If it’s too difficult, I’m out,’’ said Mr. Zheng, 66, a retired civil servant in Shanghai who declined to give his first name to avoid attracting regulatory scrutiny. He may abandon a 2.4 million yuan ($348,903) home purchase in western Melbourne, even after shelling out a 300,000 yuan deposit last August. He’s due to make another big payment next month.
The change spooking Zheng and his compatriots came in a statement from the State Administration of Foreign Exchange on Dec. 31, hours before the reset of Chinese citizens’ annual foreign currency quotas. Among other requirements, SAFE said all buyers of foreign exchange must now sign a pledge that they won’t use their $50,000 quotas for offshore property investment. Violators will be added to a government watch list, denied access to foreign currency for three years and subjected to money-laundering investigations, SAFE said.
According to the report, in the fourth quarter of 2016 (Q4), foreign buyers accounted for 10.9 per cent of all new property purchases (10.2 per cent in Q3) – the highest level since the first quarter of 2016. In established housing markets, their share rose to 7.6 per cent (6.4 per cent in Q3) – the highest level since Q4 2015.
In new property markets, foreign buyers were noticeably more prevalent in Victoria, where their market share of sales rose to 19.3 per cent (15.0 per cent in Q3).
“In WA, their market share grew to 9.3 per cent (6.6 per cent in Q4). Interestingly, the share of foreign buyers in WA has been climbing steadily since Q2 2016, suggesting foreign buyers may be seeing greater value as local prices fall,” the report noted.
“Foreign buyer levels were, however, broadly unchanged in NSW at 8.1 per cent (8.0 per cent in Q3) and fell in Queensland to 9.2 per cent (10.5 per cent in Q3) – its lowest level since mid-2014.”
In established housing markets, the NAB survey found that the share of foreign buyers increased to 10.8 per cent in Victoria (8.5 per cent in Q3) – its highest level in over a year – and 8.4 per cent in NSW (7.2 per cent in Q3).
“Foreign buyers were also a little more active in WA (5.4 per cent v 5.2 per cent in Q3), but were less prominent in Queensland, where their market share fell to just 5.0 per cent (5.7 per cent in Q3) – the lowest since mid-2012,” according to the report.