With momentum in the national housing market slowing further in the final quarter of 2024, the NAB Residential Property Index moved lower for the third consecutive quarter and slipped below average for the first time since March 2023. Outcomes were however mixed across the country, with sentiment dropping back into negative territory in the ACT, VIC and NSW. Confidence moderated with average survey expectations for house prices and rents for the next 1-2 years trimmed back. New research suggests confusion reigns in relation to the current state of housing markets in Australia.

NAB’s outlook for property prices has been slightly revised down for 2025, though we expect growth to accelerate in 2026. We now see the 8-capital city dwelling price index ending the year around 3% higher, and for a slightly larger increase of 6% over 2026. On rates, we see the RBA continuing to gradually ease policy with the cash rate falling to 3.1% by early-2026. However, we see the risk leaning towards a slightly slower pace of cuts.

Survey highlights

• With momentum in the national housing market slowing further during the final quarter of last year, the NAB Residential Property Index also continued to fall. Overall, the Index moved lower for the third straight quarter to +16 from +34 in the September quarter. The Index also printed below the survey average (+20) for the first time since the March quarter 2023.
• But outcomes varied across the country. State indices moved back into negative territory in the ACT (-30), VIC (-22) and NSW (-2) but remained positive (though lower) in QLD (+58), WA (+40) and SA (+31). It was unchanged and highest in the NT (+67) and turned positive in TAS (+36) for the first time since December 2022.
• In this survey, property professionals were asked to best describe the state of the housing market in which they operate compared to the previous quarter. It highlighted both widespread uncertainty (with the number who didn’t know ranging from 11% in WA to 22% in QLD), and the challenges faced in accurately forecasting housing markets with responses varying significantly.
• In VIC, 62% said the local market was in decline or at the bottom (8%), but 13% starting to recover and 2% rising. In NSW, 48% said it was falling, 22% recovering or rising and 9% at the peak. In QLD, 37% said it was rising, 28% at the peak and 13% starting to or in decline. In SA, 50% also said market was rising or peaking, but 25% starting to decline and 8% approaching the bottom. In WA, over 8 in 10 (82%) assessed the market as rising or peaking, and only 7% said it was starting to decline (see Chart 2).
• Confidence levels around housing markets also fell further as average survey expectations for house prices and rents for the next 1-2 years were revised down. Confidence dropped to its lowest levels since early/mid-2023, with both short (+29) and longer term (+43 pts) measures also printing below average (+38 and +46 respectively). Short-term confidence was highest in the NT (+83) and lowest in the ACT (-40). The 2-year measure was positive across the country, ranging from +93 in TAS to +24 in WA.
• The average survey expectation for house price growth was trimmed to 1.2% for the next 12 months (1.8% previously) and 2.3% in 2 years’ time (2.7% previously). Property professionals were more positive in QLD (3.4%), the NT (3.9%) and TAS (2.4%) for the next 12 months but scaled back projections in WA (4.4 pts), but still highest overall, and SA (1.8pts). They also see prices falling in the ACT (2.4%) and VIC (-1.0%), with growth flat in NSW (0.0%). House prices are expected to grow across the country in 2 years’ time, led by the NT (4.5%) and TAS (4.1%), with growth slowest in the ACT (0.5%) and VIC (1.0%).
• Property professionals pointed to a further easing in the availability of rental properties in the December quarter. Though still in short supply, the imbalance narrowed in all key states except WA, where shortages were most prevalent. NAB’s survey also suggests rental growth will be softer in the next few years, with expectations for the next 12 months scaled back to 1.6% and 2.1% in 2 years’ time – their lowest levels since September 2020. The outlook for rents in the next 1-2 years was scaled back across the country except in the NT and TAS, but positive returns are also expected across the country except in the ACT.
• The market share of FHBs in new housing markets increased to 38.2% and was higher for both FHB owner occupiers (27.8%) and investors (10.5%). Sales to owner occupiers (net of FHBs) dipped to 37.6%. Local investors were more active (17.9%) though still well below survey average levels. The market share of sales to foreign buyers also dropped to a 3-year low (4.8%).
• Construction costs were again seen as the main hurdle to starting new housing developments in December but by a lower 73% of property professionals. Delays getting planning permits was next according to a higher 61%, followed by housing affordability (37%) and rising interest rates (27%). Construction costs were the main barrier in QLD (78%) and VIC (75%). Planning permits were biggest in NSW, with rates a much bigger concern in VIC (42%).
• Buying activity in established housing markets continued to be dominated by owner occupiers (net of FHBs) with an overall market share of 43.7%. FHBs accounted for a slightly higher 35.4% of sales (25.4% owner occupiers and 10.0% investors). The share of sales to local investors was marginally higher at a below average 17.2% but ranged from 23.1% in QLD to just 9.5% in VIC. Foreign buyers also accounted for a lower 2.8% of all sales.
• Interest rates are still seen as the biggest barrier for established home buyers across the country, followed by access to credit price levels and lack of stock. Interest rates were the biggest constraint for established home buyers in VIC and NSW, access to credit in SA and lack of stock in WA and QLD.
• The market share of foreign buyers in Australian housing markets fell to multi year lows for both new (4.8%) and established (2.8%) housing in the December quarter and was also well below survey averages. The share of foreign buyers was also well below average levels in all states in both new and established and established housing markets.

NAB’s view

We have slightly revised down our forecasts for property prices over 2025 and now expect the 8-captial city index to rise by 3% though we see the index rising by around 5% over 2026. Price growth has slowed over recent months, with Melbourne continuing to decline, and Sydney also now falling. Growth in the smaller capitals has also slowed after a period of very strong growth. We expect the softening to continue in the near-term before price growth normalises in H2 2025.
Our broader views continue to encompass a soft landing for the economy with inflation settling around the middle of the RBA’s target band by mid-2025, allowing the RBA to gradually ease interest rates away from the current restrictive stance. Importantly, the labour market conditions have remained healthy, and we expect unemployment to peak in the low 4% range. That said, with growth picking up and the labour market starting from a relatively tight position, they RBA will tread carefully.