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

author-avatar By 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
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

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

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

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

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^

Rates correct as of October 18, 2021. 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 which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

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.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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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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