On the residential side, the outlook for construction and prices has worsened and firms expect a double whammy of tighter credit conditions and higher interest rates over the next year. At the same time, demand from foreign buyers is still falling.
ANZ Research’s recent Housing Update noted many indicators are around the worst levels in years.
Overall housing credit is growing at the slowest rate since 2013, investor credit is growing at the slowest rate on record. Prices are posting the sharpest declines since 2009 and auction results are the lowest since 2012. The current environment is clearly weak and the ANZ-Property Council survey reflects this.
ANZ Research believes the soft outlook can be traced back to two key indicators within the survey – finance availability and interest rates.
Survey respondents have highlighted the outlook for finance availability has worsened further and is at the lowest levels since the survey commenced in 2011. At the same time, respondents increasingly expect interest rates to rise over the next year which likely reflects a combination of out of cycle mortgage rate hikes, driven by rising bank funding costs, and talk of potential RBA rate hikes.