NSW has the strongest investor sentiment in the country, with investors expecting home prices to rise 3.3% next year and 2.8% in two years, according to the NAB Residential Property Index.
The quarterly survey found that in NSW, owner occupiers (28.9%) and local investors (21.4%) were less active in new property markets but foreign investors had reached a new high (21%).
Overall, owner occupiers (29.6%) were expected to maintain the biggest market share in the next 12 months with foreign buyers down slightly, but still accounting for 19.5% of sales.
Demand for all types of new property in NSW improved in Q1 and remained “very good” across the board.
NAB Group Chief Economist Alan Oster said that NSW had the strongest buyer sentiment.
“Overall sentiment remains strongest in NSW, followed by Victoria and Queensland," Mr Oster said.
"Sentiment improved in SA/NT but was still negative and unchanged in WA."While expectations for national house prices strengthened over the next 1-2 years, the picture remained quite mixed across states.
“Nationally, prices are tipped to grow 2.1% in the next 12 months, with expectations up in NSW (3.3%) and Queensland (3.3%," Mr Oster said.
"The outlook for Victoria (1.3%) and SA/NT (-0.4%) was scaled back, however, while prices were expected to remain flat in WA.”
Mr Oster said foreign buyers were more active in new housing markets, accounting for 15.6% of demand.
“There was, however, a notable shift in activity by location with the share of foreign buyers in NSW rising to a new high of 21% and falling to 20.7% in Victoria from 33% in Q4 2014,” Mr Oster said.
In contrast, foreign buyers were less active in established housing markets, with their share of national demand inching down to 7.5% from 8.7% in Q4 2014.
Foreign buyer demand fell notably in Victoria (8.6%) and to a lesser extent in Queensland (5.1%), but increased slightly in WA (6.1%) and was broadly unchanged in NSW (11.2%).
Nationally, 53% of all foreign purchases were for apartments, 30% houses and 17% for re-development.
The bulk of foreign buyers (41%) spent between $500,000 and $1 million, with 30% buying properties for less than $500,000 and 5% buying premium property in excess of $5 million.
According to Mr Oster: “First homebuyers still account for around 1 in 4 of all new property sales, but the share of demand from first homebuyer owner occupiers fell to 14.7% while first homebuyer investors rose to 10.1%.
"Owner occupiers were broadly unchanged at 33.1%, while local investors were down slightly to 24.1%.”
NAB Economics is forecasting average national house price growth of 4.4% through the year to end-2015. Capital growth is expected to be led by Sydney (7.7%), followed by Melbourne (6.2%), Brisbane (3.8%), Perth (0.7%) and Adelaide (0.4%).
“Average national house price growth is expected to moderate in 2016 to 3.4%, largely reflecting our forecasts for rising unemployment, sluggish household income growth, affordability concerns, especially in Sydney and Melbourne, cost of living pressures and still high levels of household debt,” Mr Oster said.
“However, we expect price growth to accelerate in Brisbane (5.7%) and in the under-performing markets of Adelaide (5.2%) and Perth (2.5%), while slowing in Melbourne (3.5%) and Sydney (3.4%)."
