Theshare of investor home loans also dropped to its lowest levelin almost a decade, falling 22.6 per cent over the year to November – or 2.5 per cent over the month – new ABS figures show.
“The crackdown on credit and tighter lending restrictions also continued playing out in new and established housing markets, with property professionals in all states citing credit as the biggest constraint on new housing development and the biggest impediment for buyers of established housing,” Mr Oster said.
Also identified as a key concern by those surveyed was housing affordability and the sustainability of house price gains.
Sydney to drop 5pc in 2019
NAB expects house prices to decline further over the next year or longer, with a peak-to-trough decline of around 15 per cent expected for Melbourne and Sydney and a further small decline predicted for Perth.
Sydney house prices are forecast to fall 5.6 per cent this year while prices in Melbourne will see a sharper fall of 7 per cent.
NAB expects unit prices in Sydney to take the biggest fall this year of 5.5 per cent followed by 4.5 per cent in Brisbane and 3.4 per cent in Melbourne.
But Mr Oster stressed the declines were a “healthy correction to the prior large run-up in prices”.
“I don’t think we are in a terrible position – for the property market to be incredibly negative you need some problems in the economy but the fundamentals are still good,” he said.
“The labour market performed relatively strongly over 2018, andunemployment has fallen. Wage growth has risen slightly and is likely to rise further with further falls in the unemployment rate over the next year or so,” Mr Oster said.
NAB’s latest forecast is less bearish than AMP Capital economist Shane Oliver’s latest expectations that property values in Sydney and Melbourne will fall another 15 per cent this year alone.
“For Sydney and Melbourne our base case has been that prices would have a top to bottom fall of around 20 per cent out to 2020,” Mr Oliver said.
“However the further plunge in auction clearance rate and acceleration in price falls late last year suggest a deeper fall possibly of around 25 per cent,” he said.
NAB has also recently revised its view on the RBA’s next move on interest rates. “We still expect the next move on the cash rate to be up, but now expect the next move to occur in the second half of 2020.”
Mr Oliver on the other hand expects the RBA to drop interest rates, with two cuts down to 1 per cent expected by the end of the year.