According to NAB global head of research Peter Jolly, while prices of residential properties in Australia have increased four times over in the past 20 years, this trend may soon be overturned.
While low home loan rates are set to continue, the lack of foreign buyers and slower population growth might eventually take a toll on house prices. Jolly explained that Chinese buyers who were avid buyers then of Australian homes have lessened their appetite. Also, demand for houses has decreased alongside lower population growth.
“There are certain markets that are heading into some oversupply,” said Jolly, speaking at an Actuaries Institute Seminar in Sydney.
“We see much more modest house price gains in most cities, and a bit of a decline or a continued decline in Perth.”
Jolly added that in some parts of Melbourne, Brisbane, and Sydney, there has also been a decline in the unit markets where there was a very clear oversupply.
But even as prices of residential dwellings are set to cool, NAB is confident this would not cause a housing crash.
“NAB’s view on housing is that we’re going to see the housing markets cool appreciably over the next year or two,” said Jolly.
“Standalone house price growth rates will slow quite a bit, and we actually see unit prices declining.”
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