NAB house price forecast points to 10% falls in Sydney, Melbourne
National Australia Bank has sharply downgraded its housing outlook, forecasting Sydney and Melbourne median dwelling values to fall 10 per cent, while mid-sized capitals are expected to decline between 2 and 4 per cent from peak to trough.
Across all capitals, NAB now expects prices to fall by about 5 per cent. A month earlier, its national forecast was for a 2 per cent decline, including falls of 6 per cent in Sydney and 7 per cent in Melbourne over 2026.
The revision comes as national dwelling values weakened by 0.7 per cent in July, the largest one-month fall since December 2022, according to Cotality. NAB linked its lower outlook to softer-than-expected results in Sydney and Melbourne and a sharper-than-expected slowdown in Perth, Brisbane and Adelaide.
Premium homes are leading the decline
The downturn has been more pronounced at the upper end of the two largest capital-city markets.
Cotality data shows houses in the top third of Sydney’s market, priced above $2.2 million, fell 6.8 per cent over the past 12 months. Houses valued below $1.1 million were still 6 per cent higher over the year.
A similar split is evident in Melbourne. Houses above $1.3 million but below the prestige segment fell 6.7 per cent over 12 months, while houses below $765,000 increased 1.7 per cent.
Domain’s worst-case scenario for this financial year has Sydney’s median home value falling by $122,000, or 7 per cent, and Melbourne’s by $84,000, or 8 per cent. Domain chief economist Nicola Powell said the falls were likely to be larger in the premium quarter of each market and could exceed 10 per cent.
Recent suburb-level results underline the concentration of weakness. In Sydney, South Coogee recorded a 15.6 per cent annual house-price decline, followed by Gordon at 14.8 per cent and Wheeler Heights at 14.3 per cent. In Melbourne, Deepdene fell 17 per cent, Hawthorn 14.7 per cent and Balwyn 14.6 per cent.
Listings add pressure heading into spring
Cotality research director Tim Lawless said housing values had fallen faster over the past two months than during the 2017 to 2019 downturn, when prices across capital cities declined 8.2 per cent over nine months. He said a fall of around 10 per cent would be the largest decline in at least 40 years.
Supply is also building. SQM Research director Louis Christopher said higher listings heading into spring were likely to contribute to further price falls if supply continued to outpace demand.
Total listings were 22.8 per cent higher than in July 2025, the strongest annual increase in available housing stock in more than a year. Sydney properties for sale were up 28.2 per cent from a year earlier, while Melbourne listings were 42.8 per cent higher.
Christopher expects another rise in listings through spring, which he said is likely to put further downward pressure on prices for the remainder of 2026.
SOURCE ATTRIBUTION:
Based on reporting by AFR, published 5 August 2026. Source: www.afr.com
