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The bank has shifted its forecast for the months ahead following data out of the September 2024 quarter.
Results from the bank’s Q3 property survey, coupled with its internal data on monthly dwelling prices, have caused the bank to shift its projection for price growth throughout the remainder of 2024, with this softening expected to continue into 2025.
According to the bank, prices across the eight capitals are projected to end the year around 6 per cent higher over the 12-month period, while growth is projected to slow to 4 per cent over 2025.
According to group chief economist Alan Oster, recent monthly results came in “slightly softer than expected”, causing the bank to revise its 2024 projection.
Oster noted, however, that 2025 has long been expected to be a slower year for price acceleration compared to those in recent history, so the results of recent months have not caused a huge change for the bank’s 2025 forecast.
NAB executive Claire Righetti said in the bank’s view, the market is likely in for a “gentle reset” of property prices.
“We’re expecting steady, but flatter growth over the coming year,” she said.
Oster added that supply constraints would ward against any major corrections, keeping the bank’s outlook for the year ahead in positive growth territory.
“Though price growth has slowed somewhat, the underlying demand for property remains strong with the population expected to remain elevated in the near term. On the supply side, despite the rise in completions in Q2 and a stabilisation in new approvals it is unlikely we will see a significant rebalancing in the property market in the near term,” he said.
Among property professionals, it appears that expectations for house prices across the nation are somewhat cautious. According to NAB’s Residential Property Survey conducted in Q3, average survey expectations for house price growth were scaled back to 1.8 per cent for the next 12 months and 2.7 per cent in two years’ time.
In most states, property professionals stated that they thought 2025 would bring a softer market for house prices, except in Western Australia, where the average projected rise came in at 5.8 per cent. Overall, moderate rises are expected in all states except for Victoria, where industry insiders foresee a 0.5 per cent fall, and the Northern Territory, where house prices are expected to drop 0.4 per cent.
Righetti commented that in light of these market conditions, it might be an opportune time for certain buyers to step in.
“Demand for homes in Australia is still going strong, although slower price growth gives those looking to buy their first home an opportunity to get into the market without the pressure of fast-rising prices,” she said.
The executive noted, however, that first home buyer activity had taken a slight hit lately, with the bank’s survey indicating that interest rates continue to be the biggest barrier to buying.
NAB continues to project that the Reserve Bank of Australia will hold the current interest rate until February 2025 before cutting by around 125 bps to 3.1 per cent by early 2026.
“We see some risk that cuts could come later in H1 2025, though that will depend on whether the labour market remains resilient and how quickly inflation moderates,” Oster noted.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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