The NAB residential property index experienced a drop in Q2 2024, falling to +46 from +57 in Q1.
Although this marks a decline, the index remains significantly above its long-term average of +20, suggesting that the market remains resilient despite several headwinds.
“The index is still trending well above average, even though we’re seeing some cooling in certain areas,” said Alan Oster (pictured above), NAB group chief economist.
Performance varied across regions. South Australia led the pack with a jump to +96 (up from +67), and the Northern Territory saw a notable increase to +60 from 0.
However, Tasmania continued its downward trend, falling to -43 from -20, reflecting weaker demand in that state.
The ACT saw no movement, holding steady at 0. Despite these regional differences, overall confidence among property professionals dipped slightly, with NAB’s one-year confidence measure dropping to +62 and the two-year measure to +60.
Despite these slight declines, both figures remain well above long-term survey averages, reflecting continued optimism amid ongoing challenges.
The NAB report highlighted several major challenges facing the Australian property market, with construction costs and planning delays topping the list for new housing developments.
A staggering 76% of property professionals identified rising construction costs as a significant barrier, particularly in New South Wales (82%) and Victoria (79%).
“Around three in four property professionals see construction costs as a significant barrier,” Olsen said.
In established housing markets, rising interest rates continue to challenge buyers, especially in NSW and VIC, where the lack of stock is also a growing concern.
NAB has revised its forecast for property price growth in 2024, expecting capital city dwelling prices to rise by around 7%, up from earlier estimates. However, growth is anticipated to slow to 4% in 2025.
“We still expect price growth to slow somewhat in 2025, though demand continues to outpace supply, especially in Perth, Brisbane, and Adelaide,” Oster said.
The market share of foreign buyers in new Australian housing markets continued its downward trend in Q2, dipping to 8.9%, below the long-term survey average of 9.1%.
The largest foreign buyer market share remains in New South Wales, at 15%, well above the average of 8.7%.
Rental markets continue to experience high demand, with growth forecast at 3.5% over the next year and 3.8% over the following year.
In particular, VIC, SA, and the ACT are expected to see accelerated rental growth as demand continues to outpace supply across the nation, NAB reported.
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