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According to the ANZ Property Council Survey’s Australian Economic Update, the housing market’s peak in earlier 2015 has passed, resulting in declining confidence in local real estate.
The report indicated that the housing sector’s performance in 2015 will not continue into 2016 due to a slowdown in house price growth and an easing construction outlook.
“The ANZ-Property Council Survey confirms that the peak in the property growth cycle has passed,” ANZ chief economist (acting) Richard Yetsenga said.
“While the housing sector has started 2016 in better shape than it concluded 2015, and a significant backlog of work is likely to mean that housing construction activity and employment remain around record levels, the slowdown in growth is proving to be inexorable.”
Mr Yetsenga said that the effects of this will be felt in a number of ways across the sector, including lower growth in housing construction and slower price growth throughout the year.
However, despite the slowdown in house price growth, the report showed that Australia remains an attractive option for foreign buyers.
Mr Yetsenga also pointed out that the outlook for the commercial property sector is more positive due to solid employment growth in Sydney and Melbourne.
Tourism also remains a standout performer, bolstered by the lower Australian dollar.
“The Australian economy does have enough positive drivers, including a strong tourism sector and an impending upswing in publicly funded investment, to help offset this void in growth,” Mr Yetsenga remarked.
“As a result, we anticipate the economy will continue to expand at a reasonable pace through 2016, leaving the RBA on the sidelines for an extended period.”
[Related: Home buyers lose confidence]
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