NAB has made its forecast for the housing downturn more severe. The bank now expects capital city dwelling prices to fall around 14% from peak to trough, up from its previous estimate of 11%, after falls in Brisbane and Perth proved steeper than it expected.
In its November Housing Monitor, NAB Economics also raised its forecast for 2026, tipping a 9% fall in combined capital city prices this year, up from 8%. It sees a floor in house prices “likely in Q2 2027”.
Combined capital city prices fell 1.4% in October, the seventh consecutive monthly decline, leaving them 8.1% below their March 2026 high. Nationally, prices fell 1.2% over the month and are 6.7% below their recent peak, although they remain around 50% higher than in late 2019.
The capital city fall of 8.1% is now just shy of the largest in 40 years, an 8.2% drop between October 2017 and May 2019. Cotality head of research Gerard Burg said: “Next month, the current downturn looks set to surpass this fall.”
The smaller capitals are now driving the declines. After revisions to earlier data, Brisbane prices dropped 2.0% in October and Perth’s slid 1.7%, leaving both cities more than 8% off their recent highs. NAB said the revised data partly explained its tougher forecast.
Sydney is furthest from its peak, down 10.1%. Melbourne is 7.8% below its high, but the pace of decline is easing there. “The pace of price falls has slowed in Melbourne,” NAB said, with prices there down 0.8% in October.
Selling times are rising across the country. Median days on market has roughly tripled in Brisbane and Perth from the very low levels seen at the start of the year.
Demand for finance has weakened considerably. The value of new housing loan commitments fell 15.5% in the September quarter, driven by a 32.3% fall in investor lending. Owner-occupier commitments eased 5.3%. NAB said most of the decline happened in June and July, although lending continued to trend lower through the quarter.
Riskier lending remains limited.
“Only a small share of new housing lending is at high debt to income or loan to valuation ratios,” the bank said. It noted, however, that owner-occupier loans with loan-to-value ratios of 90% or more increased late last year, alongside the 5% deposit First Home Guarantee scheme.
Signs of stress are emerging among existing borrowers. At CBA, the share of home loans at least 90 days overdue rose to 0.80% in the September quarter, a six-year high.
Get the hottest and freshest property and mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
