January 14, 2016 / 1:25 AM / 4 years ago

Fitch: House Price Growth to Slow Significantly in Australia, NZ

(The following statement was released by the rating agency) SYDNEY/SINGAPORE, January 13 (Fitch) House prices in several Asia-Pacific (APAC) markets are likely to slow down or decline in 2016 owing to low affordability, exposure to US rate hikes, and prudential regulations, says Fitch Ratings. The pace of house-price growth should decelerate particularly sharply in Australia and New Zealand this year; while the decrease should continue in Singapore, with prices dropping by a further 5% from last year. Of the five APAC economies assessed in Fitch's latest Global Housing and Mortgage Outlook, published on 13 January 2016, only Japan is unlikely to see house-price growth decelerate or decline from 2015. Fitch forecasts nominal house-price growth to decline to 2% in Australia and 4% in New Zealand. In Australia, this is down from an average of 8% annual growth in 2013-2015 across the eight capital cities, according to CoreLogic RP data. Stretched affordability and further compression of rental yields are likely to be key factors driving down price growth in Australia. This is especially the case in Sydney and Melbourne, where price appreciation in recent years has outpaced wage growth - leading to decreasing levels of affordability. Weaker demand from investors has also already begun to affect mortgage demand, as falling rental yields and new prudential measures restrict the growth of investment loan portfolios. In New Zealand, a supply shortage will continue to drive growth in Auckland, but this will be offset by recent restrictions on low-deposit lending by the central bank and rising unaffordability for owner occupiers. In regions outside Auckland, Fitch expects low-to-static growth in house prices. Yet our outlook for housing and mortgages in most markets in APAC is stable despite the slowdown in house-price growth. Low mortgage rates and steady mortgage performance should support markets in Australia, New Zealand, Japan and South Korea. One exception is Singapore where our outlook has dimmed from 2015 to stable/negative. Singapore is among the markets most exposed to US rate hikes; and an influx of new supply, a soft economy and ongoing measures designed to cool the property market are likely to continue to dampen sentiment. However, mortgage delinquencies for the major banks should remain low - in line with the healthy labour market and strong household balance sheets. Fitch's "Global Housing and Mortgage Outlook", includes forecasts and comparative analysis of house prices, arrears, and mortgage lending volumes for 22 countries around the world including Australia, Japan, Korea, New Zealand, and Singapore in the APAC region. The report is available by clicking the link above or at www.fitchratings.com Contacts: Ben Newey Director Structured Finance +61 2 8256 0341 Fitch Australia PTY Limited Level 15, 77 King Street Sydney, Australia Justin Patrie Senior Director Fitch Wire +65 6796 7232 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com; Leni Vu, Sydney, Tel: +61 2 8256 0304, Email: leni.vu@fitchratings.com; Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com. The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings. Related Research Global Housing and Mortgage Outlook - 2016 here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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