- Alan Oster, NAB chief economist
Sales of newly built homes in Australia drooped in September, reversing a solid growth in the preceding month, reinforcing the view the housing market may be losing momentum. Sales plunged 4.0% on month in September, the Housing Industry Association reported, following the 2.3% increase a month earlier. Demand for housing has been supported by ultra-low borrowing costs in recent years, while strong house-price inflation has bolstered incentive to build new homes. Nevertheless, building consents eased in recent months, climbing 5.1% on an annual basis in August, compared with a double-digit growth seen less than a year ago.
Australia's housing market is expected to soften further, while price growth is seen slowing as income growth continues to be modest. Sentiment towards Australia's housing market deteriorated during the September quarter with the NAB's residential property index falling 7 points to +10. The reading, the second straight decline, left the index below its long-term average of +14. Reflective of the softening outlook towards the housing market, the NAB said that estimated house price growth over the next one to two years was also scaled back to 1.5% and 1.8% respectively.
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