National Australia Bank has reaffirmed its call for the Reserve Bank to keep the cash rate on hold at 4.35% for the remainder of 2026, pointing to a softening economy and a housing downturn that is broadening across the capital cities.
In its latest Australian Forward View, NAB said the domestic economy had "lost some momentum through H1 2026," with business conditions in its own survey easing back towards long-run averages after a stronger patch in late 2025.
For brokers, the shifting price picture has practical implications for valuations and lending buffers as more capitals join the downturn.
Combined capital city dwelling prices fell for a third straight month in June, down 0.6%, the largest monthly drop since December 2022. NAB expects Sydney and Melbourne to lead declines of 6–7% over 2026, with Brisbane and Adelaide now also set to record price falls in July after a sharp change in momentum. The bank's economists noted that "risks are skewed to the downside, with the recent shift in momentum proving a bit sharper than anticipated in our current forecasts."
Higher-value properties and houses (rather than units) are bearing the brunt of the pullback, which NAB links to three rate rises this year, tightening affordability and softer investor demand following the federal budget's tax changes.
Unemployment held at 4.4% in June, but NAB expects it to drift up to 4.6% by year-end and toward 4.8% by late 2027 as job vacancies and hiring intentions soften.
NAB expects Q2 CPI data — due this Wednesday, 29 July — to come in at 4% yoy for headline inflation, well below the RBA's own May forecast of 4.8% yoy, alongside a 0.9% quarter-on-quarter rise in the trimmed mean. This print will be the next major test of NAB's view that price pressures are easing faster than the central bank expected.
The next test comes at the RBA's 10–11 August meeting, when the board will have Q2 CPI data and an updated Statement on Monetary Policy in hand.
Even so, NAB cautioned that the board remains wary of persistent price pressures. Governor Michele Bullock told the board that if inflation doesn't behave as expected, "we might have to do more... I'm just not ruling that out."
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