NAB: Aussie house prices halfway through bust

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NAB’s Q4 Residential Property Survey has been released with the bank tipping a peak-to-trough decline in Australian capital city dwelling values of around 19%.

“We see house prices continuing to decline through 2023 as the lagged impact of higher rates continue to flow through and the RBA continues to lift rates in the early part of the year”, NAB’s economic team says.

“Overall, we still see a peak to trough decline of around 19% before prices see a modest rebound in 2024”.

NAB’s dwelling price forecast is based on the RBA lifting the cash rate by 25bps at both the February and March meetings, taking the cash rate to a peak of 3.6% and staying there for the rest of the year.

“With the lags in pass through, this is likely to continue to see adjustments in the property market through mid-to-late 2023”, NAB says.

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The below table shows NAB’s dwelling price forecasts across the capital cities:

NAB house price forecasts

Sydney home values are forecast to plunge by around 21% over 2022 and 2023, with similar falls forecast for Melbourne.

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Brisbane home values are expected to fall by around 16%, with most of that decline occurring this year.

In fact, every capital city market is tipped to experience heavy price falls in 2023.

Given CoreLogic’s January home value results reported a decline in capital city dwelling values of 9.6%, NAB’s forecast suggests we are halfway through the nation’s house price bust.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.