NAB: House prices to fall up to 15% despite improved outlook

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on July 10, 2020
NAB: House prices to fall up to 15% despite improved outlook

Photo by Yoann Laheurte on Unsplash

New data has reaffirmed NAB's view that house prices will fall between 10% and 15% from peak to trough.

The NAB Residential Property Survey saw housing market sentiment crash in the second quarter of the year, with the index falling to a survey low -33 points, compared to +38 in Q1.

All states saw a decline but the biggest impact was in Victoria and New South Wales, where prices and rents are expected to fall most in the next year. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Lender
Advertised rate Comparison rate* Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
ZERO APPLICATION FEESFEE FREE OFFSET

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
ZERO APPLICATION FEESFEE FREE OFFSET

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
FixedMore details
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
REFINANCE IN MINUTES, NOT WEEKS

Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.

Rates correct as of January 22, 2022. View disclaimer.

NAB Chief Economist Alan Oster said the bank had not changed its view that the fallout from COVID-19 would see property prices sharply decline.

"While prices have held up slightly better than expected, they have now declined for two consecutive months across the capitals and we expect this to continue for some time yet," Mr Oster said.

"This easing in prices in Sydney and Melbourne comes after a very strong period in growth from mid-2019 where prices troughed."

Mr Oster said while there had been improved market conditions due to restrictions easing, a V-shaped recovery was unlikely. 

"While the initial COVID-19 related restrictions on housing activity have eased, the economy has undergone a very large contraction, and while we appear to have passed the trough in activity, it will take time for the recovery to unfold," he said. 

"The labour market fallout - and (the) consequent impact on households - will continue to play out over an extended period, which will likely see ongoing government support."

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JobKeeper and JobSeeker to remain, RBA out of options 

Mr Oster said he expected government support measures to remain in place past their September end date, which was vital for recovery. 

"While the unprecedented support provided by the government will likely be wound back in the coming months, we expect support to continue in one form or another," he said.

"That could be a more targeted form of JobKeeper and the retention of a higher unemployment benefit somewhere between Newstart and JobSeeker levels." 

In line with recent comments from the Reserve Bank (RBA), Mr Oster said the cash rate was unlikely to move for years, with negative rates extraordinarily unlikely. 

"With inflation pressure unlikely to build for some time and a long way back towards full employment, the RBA will keep the exceptionally easy stance of monetary policy in place," he said. 

Indeed, mortgage rates are at very low levels.

"The focus will also continue to be on the flow of credit to the areas which need it, but beyond that it appears monetary policy has run its course for now - and we see very little chance of a move to negative rates any time soon." 

The biggest impact on housing markets going forward

At the beginning of the year house prices were set to skyrocket, but the pandemic put an abrupt stop to that. 

NAB surveyed a panel of property experts to understand what would impact the housing market most going forward.

It found the biggest impacts would likely come from rising unemployment and job uncertainty (80%) and consumer confidence in general. 

Around six in 10 also highlighted the difficulties for consumers in accessing finance and the end of government support payments such as JobKeeper and JobSeeker (60%).

Almost half highlighted the impact on demand from lower migration (48%).


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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