Housing market sentiment has weakened across the country in the June quarter as house prices and rents have slowed, according to the latest report from NAB.
The Quarterly Australian Residential Property Survey found that national rental growth had stalled in the second quarter of this year, rising by just 0.1 per cent, compared to one per cent in the first quarter.
Estimates for rental growth were scaled back in all states. Western Australia stood out for income growth in the second quarter, despite rents growing by just 0.8 per cent, compared to 2.4 per cent in the last quarter.
Rents fell by 0.5 per cent in South Australia, reflecting the weaker local economy and were also down 0.2 per cent in New South Wales. In Victoria, rents grew by just 0.2 per cent.
NAB’s rental expectations in all states for the next year were scaled back from 2.6 per cent to 1.5 per cent, although Victoria remained mostly unchanged at 1.5 per cent.
In WA, rental growth was predicted to soften to from 4.2 per cent to two per cent. Expectations were also lowered to 1.5 per cent in SA and the NT. NSW had the weakest rental expectations for next year at 1.3 per cent.
“With the Australian economy slowing and labour market pressures growing, national rental returns are forecast to slow to 2.6 per cent in the next two years,” the report said.
“Returns are expected to be highest in WA (three per cent) with yields of around 2.5 per cent forecast in all markets.”
NAB’s report disputes recent figures released by SQM Research, showing that residential property rental vacancies had increased for four consecutive months up to May this year.
NAB surveyed 300 property market professionals, including real estate agents, property owners and developers.