House prices to rise steadily, economists say

House prices to rise steadily, economists say
Date of Publication: Thursday, 11 April 2013 14:03

Economists from two of Australia's biggest banks believe that the housing market has recovered from its 2012 dip, but predict that improvements will be steady rather than spectacular.


National Australia Bank group chief economist, Alan Oster, and Westpac chief economist, Bill Evans, told the Bloomberg Australian Economic Summit that house prices have recovered from last year’s stumble but that they will only grow modestly in the months to come.


Westpac and NAB are Australia’s second and third largest home loan providers, according to the Australian Prudential Regulation Authority, providing around 17% and 26% respectively.


To NAB’s Alan Oster, responsible for the bank’s global economic forecasts, the property market has recovered from its weak patch in 2012, but will not begin to grow excessively.


"Clearly the market is starting to improve and we would expect it to increase moderately as we go forward," he told the summit.


Westpac’s Bill Evans predicted that house prices would rise in line with incomes.


"We’re not looking for another huge surge in prices or activity that we saw in, say 2009, or that we saw in 2001," he said.


"The housing market will improve but it won’t improve to the point that people are becoming over-leveraged or we’d start to see real issues in our loan book."


Oster agreed, saying: "Australia’s default rates are very, very small and they’re not going up."


Daniel Morris


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Thursday, 11 April 2013 14:03
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