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NAB tips house price turning point in late 2022

The big four bank has predicted house price growth will moderate later in the year, in tandem with the Reserve Bank of Australia kicking up the cash rate.

While others such as CBA and Westpac believe the RBA will begin to raise the cash rate from August, and ANZ has sided with a September commencement, the NAB team has pointed to November, with a steady series of increases to continue through 2023 and 2024.

NAB has predicted a 65 basis point rise by February 2023, from the current record low of 0.1 per cent.

The bank’s economists have also modelled flatter growth for dwelling prices in 2022 of around 3 per cent, before a decline of 10 per cent in 2023.

The movements would follow on from a 22 per cent rise in national prices last year.


“In terms of forecasts, we have brought forward the timing of the correction we expect in house prices to late-2022 as affordability constraints begin to bite and rising mortgage rates place downward pressure on prices,” the research note from NAB Group chief economist Alan Oster stated.

“This would offset gains seen in early-2022, so that overall prices end the year roughly flat.”

Across the capital cities, NAB expects price growth will be weaker than the national average, with a 2.7 per cent rise anticipated in 2022. However the decline forecast in 2023 is tipped to be smaller, at -9.3 per cent.

Sydney and Melbourne are anticipated to face the greatest price falls next year, with NAB forecasting a drop of 11.4 per cent for both cities. This would follow a 1.9 per cent rise in Sydney during 2022 and a 1.2 per cent increase in Melbourne.

Perth is expected to face a 4.2 per cent rise in 2022, followed by an 8.1 per cent drop the next year.

Brisbane followed with a 2022 forecast rise of 4.1 per cent, followed by a 6.4 per cent decline in 2023.

In Adelaide, NAB projected a 3.5 per cent rise, before a 5.8 per cent price fall.

Hobart on the other hand would see a fall smaller than its rise in 2022, with NAB tipping a 4.5 per cent increase, followed by a 4.1 per cent decline.

But Mr Oster explained that he does not see the declines as “disorderly”, as the labour market is expected to stay strong, with wages growth to pick up and mortgage rates still relatively low (though increasing).

“With the economy expected to grow by around 3.6 per cent this year, and at around trend (2.5 per cent) next year, we see the unemployment rate declining further from here,” he wrote.

“Wages growth will pick-up as unemployment declines but is likely to strengthen only gradually. That said, as wage pressure builds the RBA will be more comfortable with inflation remaining sustainably within the target band.”

And if the RBA is satisfied that inflation is sustainably within its target band of 2 to 3 per cent, it has said it will raise the cash rate.

Concerns over credit access rise

However, NAB’s Residential Property Index, which captures property professionals’ views of prices and rents, showed different expectations from industry.

Survey respondents had tipped a 3 per cent rise in the 12 months ahead and a 1.7 per cent incline over the next 24 months.

During the third quarter of 2022, NAB’s survey respondents had tipped a 4.3 per cent rise in the 12 months ahead and a 3.8 per cent rise over the next 24 months.

But rising costs for construction amid labour shortages and supply constraints were flagged as a “very significant” impediment for new housing.

Concerns over access to credit and rising rates also rose sharply in the December quarter, holding the biggest influence on NSW and Victorian buyers.

Property professionals had also identified lack of stock and price levels as the largest impediments for buyers of existing property nationally. However, lack in stock was a bigger issue in Western Australia, while price was a larger focus for buyers in Victoria and NSW. Both issues were important for Queensland buyers.

NAB’s Residential Property Index eased to 59 points in the December quarter, well above the average 16 points, but slightly down from the 60 points in the September quarter. Waning property price growth had pushed the index down from a high in the June quarter, of 71 points.

Sentiment had been highest in the Northern Territory (at 83 points, compared to 67 points in Q3) and lowest in Victoria (48 points, compared to the previous quarter’s 44 points).

The index is only expected to keep declining, with NAB predicting it will hit 56 points in one year and 47 points in two years.

Market confidence levels among property professionals also moderated, with the 12-month confidence measure falling for the third consecutive quarter to 56 points, compared to 62 in the three months to September.

The 24-month measure also declined for the third straight quarter, down to 47 points compared to 59 in the previous quarter. But it was in line with the survey average of 46 points.

Housing market confidence for the next 12 months remained highest in the NT (up by nine points to 92 points) and the ACT (down 25 to 75 points) – although they captured smaller sample sizes.

Tasmania had the lowest confidence levels, at 44 points. Confidence had eased in all other states, except Victoria (although its level of 52 points was comparatively low).

The two-year confidence measure was also highest in the NT and ACT. Longer-term confidence levels were lowest in Queensland (down 18 to 39 points), Tasmania (up five to 44 points) and NSW (down 20 to 44 points).

[Related: Major bank invests in deposit disrupter OwnHome]

NAB tips house price turning point in late 2022

Sarah Simpkins

Sarah Simpkins is the news editor across Mortgage Business and The Adviser.

Previously, she reported on banking, financial services and wealth management for InvestorDaily and ifa.

You can contact her on This email address is being protected from spambots. You need JavaScript enabled to view it..

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