National Australia Bank (NAB) recently released the results of its Quarterly Australian Residential Property Survey for Q4 2014. The report, which involved around 300 professional and expert panellists from the industry, compared house prices, capital growth and market sentiment across all six states – as well as the expectations for the year ahead.
Generally, the results suggest that “the housing market is losing steam” as national house prices are expected to grow just 1.5% in the coming year, with 1.8% growth predicted for two years’ time. Expectations for the rental market are even less optimistic with national rents predicted to rise only 0.8% in the next year, and 1.2% over the next two years.
But among these poor expectations for growth were a number of suburbs that showed promise for the year ahead. We took an in-depth look at the NAB’s results for each major Australian region, comparing price indices and growth expectations, as well as listing the 28 suburbs tipped for above average capital growth in 2015.
New South Wales
While the second half of 2014 saw Residential Property Indices drop across all six states, New South Wales (NSW) ended the year with the highest index at 29, with a predicted index of 37 in the next year. In terms of properties bought by foreign buyers, NSW also looked strong as it held the highest percentage of sales in the $1-5 million range of houses. Along with Queensland, it also had the highest demand for new, inner city high-rise apartments, despite being faced with relatively high construction costs and a lack of development sites.
Across all six states, predictions for capital growth were at their strongest in NSW across all property price ranges, closely followed by predictions for Victoria. While capital growth expectations for houses in the highest range (above $5 million) were rated “fair”, expectations for every other bracket – from less than $250,000 up to $5 million – were rated “good” or “very good”. In particular, it’s in the apartment market that NSW pulls away from the other states, with far higher expectations for its growth than any other.
New South Wales suburbs tipped for above average capital growth:
- Oran Park
- Surry Hills
Predictions for the future of property in Queensland are looking strong, with an expected Residential Property Index of 58 over the next year and the next two years. Average house prices over the next two years are expected to grow by 2.7%, the highest prediction of all the surveyed states. It also seems to be the favoured choice for foreign buyers interested in top-end property as it held the highest proportion of properties sold for over $5 million at 7.6%.
Queensland suburbs tipped for above average capital growth:
- Gold Coast
- New Farm
- West End
Victoria seems to be the most popular location for buyers from overseas entering the market, with almost 1 in 3 (32.5%) of all foreign sales. Its Residential Property Index saw a steep drop at the end of 2014 – from 36 to 21 – but the forecasts for the next year are optimistic, predicting an index as high as 51. Victoria also received the most optimistic outlook for house prices over the next 12 months, with a predicted growth of 2.2% – the highest of all the states.
With the highest median house prices in the country, there’s some concern over prices and interest rates becoming an obstacle to buying property. There’s also been a considerable drop in demand for new properties – especially inner city houses and low-rise apartments.
Victoria suburbs tipped for above average capital growth:
- Glen Iris
South Australia/Northern Territory
The last quarter of 2014 saw a sharp drop in the Residential Property Index for SA/NT – from +29 in Q3 to -25 in Q4. But the survey’s respondents expect a recovery: within the next year, its index is predicted to climb back up to 31. Expectations for average house prices, however, were low as prices are expected to remain flat for the next 12 months, and to fall by 0.2% over the next two years.
SA/NT also displayed some major obstacles in the purchase of existing property. In particular, employment security and access to credit were both considered significant constraints.
South Australia suburbs tipped for above average capital growth:
- Mile End
While Western Australia (WA) held a negative Residential Property Index for much of 2014 – ending the year at -34 – predictions for the next two years would see it climb back up to +16. Much like Victoria, WA saw a considerable drop in demand for new inner city houses and new low-rise apartments, citing construction costs and housing affordability as the two greatest constraints. Similarly, ratings for the expected demand for all types of existing property over the coming year were only “fair”.
Of all the states surveyed, expectations for capital growth in WA was at its weakest – expected capital growth for houses over $1 million and apartments over $2 million were all rated as “poor”.
Western Australia suburbs tipped for above average growth: