The major banks have now flagged larger-than-expected house price falls as senior government ministers emphasise opportunities for first home buyers.
Australia’s largest banks have downgraded their near‑term housing outlooks, with National Australia Bank (NAB), Australia and New Zealand Banking Group (ANZ), and Westpac all forecasting a steeper “correction” in prices than previously anticipated.
NAB on Tuesday (4 August) formally revised down its near‑term property outlook, now projecting dwelling prices across the eight capital cities to fall about 5 per cent over this year, more than double its previous 2 per cent decline forecast.
The bank expects the downturn to be led by roughly 10 per cent drops in Sydney and Melbourne, with mid‑sized capitals such as Brisbane, Adelaide, and Perth set to experience 2–4 per cent falls.
Looking beyond the immediate downturn, NAB said it was pencilling in a gradual recovery.
“We expect prices to level out in early 2027 before beginning to grow modestly in H2 2027 as lower rates begin to provide support and sentiment in the market improves,” NAB said.
ANZ sees price falls feeding into credit
ANZ’s latest housing analysis has also pointed to a sizeable near‑term drop in values across the capitals.
On a three‑month annualised basis, the bank estimates capital city housing prices are down 9.6 per cent.
However, ANZ noted that the credit data had held up better than prices, with the bank stating that housing credit growth was steady in June.
Yet it added that quarterly growth had eased slightly from 1.9 per cent in the first quarter to 1.8 per cent in the second quarter.
ANZ said that investor lending had also started to cool at the margin, yet added that it was yet to see a sharp pullback.
“While the monthly pace of investor housing credit growth (0.8 per cent m/m) has moderated from its peak of 1 per cent m/m in late 2025, so far, the credit data has not suggested much of a pullback in investor activity,” it said.
“Given the slow‑moving nature of the credit data, we think this trend will gradually become more apparent over the coming months.”
Westpac warns on sales slump
Westpac’s head of Australian macro‑forecasting Matthew Hassan said that the downturn was no longer confined to Sydney and Melbourne.
He said the bank’s latest read showed “a broadening and deepening price correction which is running at a similar pace to previous months in Sydney and Melbourne but swung sharply from solid gains to material declines in Brisbane and Perth”.
Alongside prices, Westpac said turnover was weakening significantly, with its preliminary data pointing to sales running at around a 5 per cent quarterly pace of decline over the past three months, leaving activity down nearly 12 per cent year on year.
The bank added that the same estimates implied much steeper falls in Sydney and Melbourne, with quarterly sales dropping closer to 18–20 per cent.
Cotality’s Home Value Index revealed that the national index fell 0.7 per cent in July – the largest monthly decline since December 2022 – pushing values 1.9 per cent lower over the July quarter.
In Sydney, values edged down 1.4 per cent over the month, followed by Melbourne with a 1.2 per cent fall.
Brisbane slipped 0.6 per cent and Adelaide 0.2 per cent, marking a second month of declines in both cities after historical revisions.
Ministers pitch affordability and long‑term perspective
Against that backdrop, senior federal government ministers are attempting to frame the correction for wary households.
Doing the breakfast television rounds on Tuesday, federal Social Services Minister Tanya Plibersek said that lower prices were creating long‑awaited openings for younger buyers.
“We’re seeing at auctions right across Australia first home buyers bidding for a home of their own and I think that is fantastic,” she said.
“You know how hard it is to save a 20 per cent deposit if you’re paying rent in Sydney? It was impossible and we were locking people out of the housing market – now they’ve got a shot at doing what their parents and their grandparents took for granted.”
Treasurer Jim Chalmers, meanwhile, stressed that budget settings still assumed prices would rise over coming years, albeit at a slower pace than in the past.
“The Budget assumptions were that over the course of the next couple of years we will see prices continue to grow, but a bit more modestly than they have been,” he said.
“This is only the first couple of months of that two-year period.”
Chalmers also emphasised the longer‑term nature of housing decisions.
“Housing is a long-term investment, and we continue to expect over the course of the coming years that prices will continue to rise, but more modestly than before,” he said.
[Related: Mortgage demand dives as hardship climbs]
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