Morning Briefing: NAB predicts down year for price growth

House prices in Australia will continue to rise but at a far slower pace, NAB predicts... Rentvesting grows due to affordability, work choices...

Morning Briefing: NAB predicts down year for price growth
NAB predicts down year for price growth
House prices in Australia will continue to rise in all but one Australian capital city next year, though it will be at a much slower pace than what has been seen in recent times.

According to NAB’s Residential Property Survey for the June quarter, 2016 is set to see stronger than expected price growth, before a dramatic slowdown in growth eventuates in 2017.

The survey’s results show that NAB has revised its growth prediction for 2016 and expects house prices to grow by 5.1% during 2016 after their March quarter survey predicted growth of just 1.5%.

The increased growth expectations have been driven by continued strength in Sydney and Melbourne, which have seen double-digit growth in the year to June.

“Our upwards revisions in price forecasts reflects the strength in prices to date. Over the last six months, Sydney and Melbourne prices have increased by an annualised rate of nearly 19% and 12% respectively,” NAB chief economist Alan Oster said.

Rentvesting grows due to affordability, work choices
One investment strategy is becoming increasingly popular across Australia, with the cross-section of people whose first property purchase is an investment property rather than their own home growing.

According to real estate franchise LJ Hooker, which claims to have identified the emergence of so called rentvestors™ in 2013, the strategy is becoming increasingly popular with Australians of different ages and income levels.

When the trend first emerged it was favoured strategy of a particular segment of the population, but LJ Hooker head of research Mathew Tiller said the rentvesting is moving further into the mainstream.

“Interestingly when LJ Hooker first identified the rentvestor trend we described it as a ‘young couple in their late 20’s or early 30’s who love their lifestyle and don’t want to relocate from where they were renting’, however our latest research shows that there are now two clear types of rentvestors,” Tiller said.

“The first category being those who are driven by lifestyle choices and affordability constraints and the second category who are driven by work, study or other personal circumstances,” he said.

(Your Investment Property)

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