The housing market has had a pretty good year compared to some forecasts, but the National Australia Bank has predicted things to seriously flatline next year.
The NAB has forecasted a 6.1 per cent rise in house prices for Melbourne for the whole of 2016, and that’s well above earlier predictions.
Chief economist at NAB, Alan Oster, told The Age he doubts the strong performance over the first half of the year will continue.
“Over the last six months, Sydney and Melbourne prices have increased by an annualised rate of nearly 19 per cent and 12 per cent respectively,” he said.
“However, while there is significant amount of uncertainty over the outlook for prices, we expect that this renewed momentum in the housing market is unlikely to be sustained over the longer term.”
Melbourne house prices are forecast to creep up just 0.4 per cent next year, but the idea of a bubble or steep decline was dismissed unless there were big jumps in unemployment or interest rates.
According to NAB’s forecast report, the effect of recent interest rate cuts were dwindling while the ongoing effects of tighter lending restrictions were ever-present.
Falling foreign investment in Australian property was also putting downward pressure on prices, with foreign buyers’ share of the market falling for the third quarter in a row.