House price expectations in Australia are falling as rents weaken, according to the December quarter NAB Residential Property Index.
The index shows softer sentiment right across Australia and a deeply negative outlook in Western Australia.
Several indicators have been showing a weakening in growth in house prices. Ratings agency Fitch Ratings say growth in houses prices had slumped to 4% down from 7% in 2014. And the official numbers from the Australian Bureau of Statistics show an easing in growth.
According to the NAB, almost 10% of all property is being bought by first home buyers as an investment rather than as a place to live.
And foreign buyers are less active in all states except in Victoria. Over half of all foreign transactions are apartments and 70% are properties valued at less than $1 million.
According to the NAB, national house prices are now expected to grow just 1.5% in the next year.
The outlook is strongest in Victoria (2.2%), Queensland (2.1%) and NSW (1.5%) with prices flat in SA/NT and falling in WA (-0.2%).
Overall expectations for rents improved a little over the quarter but are still weak. National rents are now tipped to rise 0.8% next year led by mildly stronger expectations in Victoria and Queensland (1.3%).
The national outlook for rents in the next two years are unchanged at 1.2%, with improvements in Victoria (2%) and Queensland (1.8%) masking softer outlooks in NSW (1%) and SA/NT (0.7%), and negative returns in Western Australia (-0.1%).
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