House price growth to 'slow sharply': ANZ

House price growth to 'slow sharply': ANZ

The growth in house prices has peaked, says ANZ – and tighter borrowing conditions and out-of-cycle rate hikes will weigh on property markets.


In a housing market update this week, ANZ Research said it expects “prices to slow sharply this year and next” and flagged the potential oversupply of apartments – particularly in Melbourne and Brisbane – as a key concern.

“The twin issues of housing affordability and financial stability are front of mind for governments, the RBA and APRA,” the bank said. “Household debt is at record levels, which increases vulnerability to future shocks.”

According to ANZ, the residential construction cycle has lost momentum with approvals down about 20 per cent from their 2016 peak. The major bank expects another 5-10 per cent fall in the next 6-12 months.

“That said, the solid pipeline of work suggests that the level of residential construction activity will slow only gradually this year. There has been a slight rise in settlement risk which bears close monitoring,” ANZ said.

ANZ believes that the housing market will steadily cool going forward with a combination of further regulation and changes to government policy, tighter borrowing conditions and out-of-cycle mortgage rate increases all expected to weigh on the outlook for prices.

“We anticipate nationwide dwelling prices will rise by 4.5 per cent through 2017, before slowing further to 1.9 per cent 2018 and expect to see continued divergence across regions,” the group said.

While price growth in Sydney and Melbourne is expected to slow to well below historical averages, ANZ said these markets will remain positive as demand and population growth remain elevated.

“On the other hand, prices are expected to ease slightly through 2018 in Brisbane, given the significant volume of supply due to hit that market,” the bank said.

Read more:

BT formalises ethics training for advisers

Aussies sceptical about retail super: poll

UBS adds to fixed income team

Westpac outlines RegTech strategy

 

House price growth to 'slow sharply': ANZ
ANZ, housing, ANZ Research, RBA, APRA
ID logo
promoted stories

Appointments

investordaily image

AMP names incoming chief risk officer

Jessica Yun

investordaily image

Antares Equities hires new director

Staff Reporter

Brad Fox

Former AFA CEO appointed to boutique board

Staff Reporter

Analysis

investordaily image

Warning lights flashing on Aussie equities

Roy Maslen

investordaily image

What’s in store for the economy in 2018?

Frank Uhlenbruch

ST Wong

Busting common passive investing myths

ST Wong