Investors and foreign buyers retreat from market

house keyA decline in the number of investors and foreign buyers in the Australian market could be the reason behind last quarter’s market slow down, according to a quarterly residential property survey by NAB Group.

The NAB Residential Property Index fell to just +1 in the final quarter of 2015 (down from +10 from the previous quarter) and now sits well below its long-term average (+13).

The survey showed that investors played a smaller role in both new and established property markets in the final months of 2015, and that foreign buyers were less active everywhere except Queensland.

Results from the survey showed that Australian investors were noticeably absent in the established property markets, where their share of total demand fell to a survey low of 19.2 per cent, from a survey high of 25.2 per cent in Q3’14.

Foreign buyers were also less prevalent nationally, accounting for 14.4 per cent (15.7% in Q3) of all new property sales and 8.6 per cent in established markets (9% in Q3).

According to NAB Group Chief Economist Alan Oster, “Weakening fundamentals have already seen the market starting to cool, suggesting the best of the price gains are probably behind us”.

Going into 2016, Mr Olster also predicts that credit restrictions on investors and a large existing pipeline of residential construction, especially in the apartment market, should see average national house price growth slow to just 1% (2.3% previously).

The apartment market isn’t expected to have the best year either, with NAB expecting the average national unit prices to fall by 1.2 per cent.

However, while the outlook doesn’t look as good for the investor market, the market is showing improving conditions for owner-occupiers, which means that if you’ve been thinking about buying then now might be the best time to get in.

If you’re interested in finding out about the local market, then feel free to get in touch with the Arbee Real Estate team for any advice or local real estate information.