According to The Australian Financial Review, house prices will rise a faster-than-expected 5.1 per cent this year, due to stronger growth in Melbourne and Sydney, the National Australia Bank's second quarter Residential Property Survey says.
Price growth has picked up since March in the two largest cities and in the year to June, Melbourne homes rose 12.1 per cent, while Sydney gained 11 per cent, the NAB's latest quarterly survey shows.
Brisbane (7.6 per cent), Adelaide (3.9 per cent) and Hobart (4.9 per cent) also benefited from "solid and generally better-than-expected" growth, the report said.
However, the good news only delays rather than rules out a severe slowdown from last year's 7.8 per cent growth, NAB said.
The outlook for apartments is worse, with prices expected to fall in every city except Adelaide and Hobart.
The survey of 230 property professionals, the first since the Reserve Bank cut interest rates in May, shows overall weak sentiment. It chimes with a separate ANZ/Property Council of Australia survey this week that showed confidence among property professionals had weakened to a three-year low.
The market has certainly come off recent highs. Wary of over-extending themselves, banks have tightened credit and this is curbing the ability of both local and foreign buyers to take out mortgages.
The NAB survey also showed foreign purchases of new property fell for a third straight quarter to their lowest level in two years.
Foreign buyers accounted for 10.4 per cent of total new property sales in the second quarter, down from 11.8 per cent in the March quarter and 12.8 per cent a year ago, and 7.2 per cent in established property markets.
The biggest change was in Queensland, where the proportion of foreign buyers nearly halved to 11.2 per cent, compared with 21.9 per cent in the first quarter.
Foreign buyers increased over the quarter in Victoria's new property markets, with their market share doubling to 21.7 per cent from 10.7 per cent.
"This sharp jump in buying activity came ahead of an increase in the stamp duty surcharge on foreign buyers of residential real estate in Victoria from 3 per cent to 7 per cent on contracts signed from July 1 2016," the report said.
Foreign buyers also increased their market share slightly in NSW to 11.8 per cent from 11.1 per cent in the first quarter, but this was well below the high of 21 per cent the survey recorded in the first quarter of last year.
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