Early signs foreign buyers may be returning to the market, while interest rates weigh more heavily on local homebuyers. NAB’s outlook for dwelling prices is broadly unchanged – we still expect a slowing in national prices through 2022, before a moderate fall of around 10% in 2023.

Survey highlights

• The NAB Residential Property Index printed at a steady +58 pts in Q1 (+59 pts in Q4), buoyed by solid rents as house price growth softened.
• The survey also points to slower national house price growth in the next 1-2 years, with WA the clear out-performer and VIC trailing.
• Rents are however expected to grow well above average survey levels and outpace price growth in all states.

NAB’s view

• Our outlook for property prices is broadly unchanged in annual terms – where we expect an overall rise of around 2.5% this year, before prices decline by around 10% in 2023.
• Overall, the housing market has turned slightly quicker in Sydney and Melbourne than we had expected in early-2022 but out-performed in the smaller capitals.
• We see this as an orderly correction in house prices with the economy and labour market continuing to perform strongly and wage growth strengthening.