The sudden collapse in confidence of future growth detailed in the latest ANZ/Property Council of Australia survey of more than 1700 property professionals from across the whole industry comes as investor home lending dropped for the fifth month in a row in May while house prices eased over the June quarter.
With auction clearance rates slipping in the main capital cities, The Australian Financial Review revealed on Wednesday that sellers had now placed more homes on the market in Melbourne and Sydney than at any time over the past two years.
The overall index for Australia showed that expectations on house price growth had fallen to 4.3 points from 20.2 points with out-of-cycle interest rate rises from the banks and tougher rules from Australian Prudential Regulation Authority playing a key role in the pull back in growth expectations.
In NSW, where Sydney house prices dipped by 1.3 per cent in April, the ANZ PCA index of house price growth expectations sank to just 1.7 points from 29.6 in the last reading three months ago. In Victoria the index also fell to 7.1 points from 29.1.
With many owners trying to sell ahead of an expected slowdown in price growth, developers are also nervous about the future. Building approvals for apartments in three months to May fell 28 per cent as banks withdrew financing for development. New taxes, from both state and federal governments on foreigner buyers have also weighed on the market.
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