NAB has cut its house price forecast. Its October 2026 Housing Monitor, published on 7 October, now expects dwelling prices across the eight capital cities to fall 8 per cent over 2026, up from its previous forecast of a 6 per cent fall, with a total peak to trough decline of around 11 per cent.
The bank expects prices to find a floor in the second quarter of 2027, according to Broker Daily. That means the current slide, which has now run for six straight months, may have further to go.
Why NAB changed its forecast
In its own words, NAB lowered its forecasts “given the sharper slowdown across the mid-sized capitals”. Until recently, cities such as Brisbane, Perth and Adelaide had held up far better than Sydney and Melbourne. That has changed. NAB says the previously resilient mid-sized capitals each fell by 1 to 1.5 per cent in September alone.
Several pressures are working together:
- Higher interest rates. The Reserve Bank has lifted the cash rate four times in 2026, most recently to 4.60 per cent on 29 September, as we covered in our report on the RBA’s September rate hike. Cotality estimates the four hikes have cut a typical borrower’s capacity by almost $90,000, as reported by Broker Daily.
- Investor tax changes. The federal budget overhauled investor tax settings, including capital gains tax and negative gearing, which has weighed on investor demand.
- Weaker lending. ABS data shows new housing loan commitments fell 5.2 per cent in value in the June quarter, with investor commitments down more sharply than owner occupier loans.
- More supply. NAB estimates around 250,000 dwellings are under construction, roughly 40 per cent above the 2010 to 2019 average.
What has happened to prices so far
According to the Housing Monitor, combined capital city dwelling prices fell 1.2 per cent in September, the sixth monthly decline in a row. Prices are now 6.4 per cent below their March 2026 peak. Unit prices fell 0.8 per cent in the month, a smaller drop than houses.
Sales have slowed too. NAB says median days on market has risen to 41, the highest since late 2020. For a broader look at the September figures, see our report on the sixth straight monthly fall in home values.
The city by city outlook
NAB’s forecasts, as reported by Broker Daily, point to declines in every major capital, though the size varies:
- Sydney: down 1.4 per cent in September and 8.6 per cent below its peak. NAB expects the largest decline of the major capitals, around 14 per cent from peak to trough.
- Melbourne: down 0.7 per cent in September and 7.2 per cent below its peak, with a forecast peak to trough fall of around 11 per cent.
- Brisbane: 5.4 per cent below its recent peak, with a forecast fall of around 11 per cent.
- Perth: 6 per cent below its peak, with a forecast fall of around 11 per cent. NAB notes rental vacancy rates are rising, particularly in Perth.
- Adelaide: 2.9 per cent below its peak, with a forecast fall of 8.5 per cent.
NAB is not alone. Commonwealth Bank chief executive Matt Comyn has said he expects a 9 per cent house price fall, with the decline running well into 2027, Broker Daily reported. Cotality’s research director Tim Lawless has described a 10 to 15 per cent fall as a reasonable estimate, according to the ABC.
A forecast is a range, not a promise. Plan around what you can afford today, not what prices might do next year.
What it means for buyers
This is general information only, not personal financial advice. Falling prices can sound like good news for buyers, but higher rates have reduced how much most people can borrow, so the two effects partly cancel out.
A few points are worth weighing:
- Buyers have more leverage. With listings sitting on the market longer, there may be more room to negotiate on price, conditions and settlement terms.
- Timing the bottom is hard. Forecasts from major banks have changed several times this year. Buying with a long time horizon reduces the risk of a short term price dip.
- Get pre-approval reassessed. If your pre-approval was issued before the September rate rise, check it still reflects your current borrowing capacity.
- Schemes still apply. The 5 per cent deposit First Home Guarantee has now passed 100,000 buyers, according to Broker Daily. Eligibility rules and price caps apply, so check the official Housing Australia website.
If you are weighing up whether to buy now or wait, it can help to work through a step by step guide to buying your first home before you start making offers.
What it means for owners and sellers
For most owner occupiers who plan to stay put, a paper fall in value does not change their day to day position. The bigger pressure is repayments. The RBA’s Financial Stability Review, released on 1 October, found most households appear resilient, and Broker Daily reports overall arrears at around 1 per cent.
Sellers face a tougher market. Longer selling times and more competing listings mean pricing realistically from the start matters more than it did a year ago. Anyone who bought near the March peak with a small deposit should be aware that further falls could reduce their equity, which can limit refinancing options.
What to watch next
The next key data points are the September quarter CPI in late October and the RBA’s meeting on 3 November 2026. Banks are split on whether rates will rise again: Westpac and ANZ have forecast a further hike, while CBA and NAB expect the cash rate to hold. Another rise would likely add to pressure on prices, while a pause could help the market stabilise sooner than forecast.
The bottom line
NAB now expects capital city dwelling prices to fall 8 per cent over 2026 and around 11 per cent from peak to trough, with the bottom arriving in the second quarter of 2027. Sydney is tipped to fall furthest, and the downturn has spread to the mid-sized capitals that held up earlier in the year. These are forecasts, not certainties, and they have already changed more than once. For the latest figures, read NAB’s Housing Monitor directly and check lending data with the Australian Bureau of Statistics. All figures were reported between 1 and 9 October 2026 and may change.