The great majority of professional investors polled in a recent survey say they expect Australian house prices to keep falling over the next 12 months.
According to the latest Fitch Ratings Australian Fixed Income Investor Survey, 95 per cent expect house prices to keep falling in the year ahead and 15 per cent expect further falls of more than 10 per cent.
Not one of the 43 investors surveyed believe house prices will rise.
Fitch itself is forecasting a further decline of around 5 per cent nationally, before prices stabilise in 2020.
According to the latest CoreLogic report, dwelling values across Australia fell by 0.5 per cent in April and by 7.2 per cent over the 12 months to the end of April.
Sydney dwelling values were down 0.7 per cent in April and by 10.9 per cent over 12 months. Melbourne values were down 0.6 per cent in April and 10 per cent over 12 months.
CoreLogic says there has been an improvement in the rate of decline. For example, in Sydney in December dwelling values fell 1.8 per cent.
CoreLogic head of research Tim Lawless says: “While none of the indicators could be described as strong, the current trend in the data implies that housing market conditions may have moved through the worst of the downturn.”
Seventy per cent of respondents to the Fitch survey rank a housing market downturn as “the most serious threat to Australian credit markets.” When Fitch asked the same question a year ago, only 29 per cent rated a housing downturn a high risk.
Risks that ranked behind a housing market downturn include ‘China hard landing’ and ‘domestic political upheaval’
They see little prospect of the banks loosening their lending standards in the coming year. More than 70 per cent said borrowing conditions would get tougher for high-yield corporates, SMEs and retail sector borrowers.
Lawless says: “Considering that tighter credit conditions were one of the primary catalysts for the housing market downturn, any sign that credit availability is improving would be a welcome outcome for the housing market.”
Investors were more optimistic about the employment market, with all survey participants saying they expected unemployment to stay at or below 6 per cent this year. Seventy-seven per cent said the unemployment rate would be 5.5 per cent or less.