The NAB predicts a turning point in house prices at the end of 2022

While others like CBA and Westpac think the RBA will start raising the cash rate from August, and ANZ has sided with a September start, the NAB team said November , with a regular series of increases that will continue through 2023 and 2024.

The NAB has forecast a 65 basis point hike by February 2023, from the current record low of 0.1%.

The bank’s economists also modeled steadier house price growth in 2022 of around 3%, before falling 10% in 2023.

These movements would follow a 22% increase in national prices last year.

“In terms of forecasts, we have brought forward the timing of the correction we expect in house prices at the end of 2022, as affordability constraints start to bite and rising mortgage rates put pressure on the market. the decline on prices,” notes the research note from NAB Group Chief Economist Alan. Oster said.

“That would offset the gains seen in early 2022, so overall prices end the year roughly flat.”

In capitals, NAB expects price growth to be weaker than the national average, with a 2.7% rise expected in 2022. However, the expected decline in 2023 is expected to be smaller, at -9 .3%.

Sydney and Melbourne are expected to face the biggest price declines next year, with NAB predicting an 11.4% drop for the two cities. This would follow a 1.9% increase in Sydney in 2022 and a 1.2% increase in Melbourne.

PerthPerth, TAS Perth, WA is expected to face a 4.2% rise in 2022, followed by an 8.1% decline next year.

Brisbane followed with a projected rise of 4.1% in 2022, followed by a fall of 6.4% in 2023.

In Adelaide, NAB forecast a 3.5% rise, before prices fell 5.8%.

Hobart, on the other hand, would see a lower decline than its rise in 2022, with the NAB tipping a 4.5% increase, followed by a 4.1% decline.

But Mr Oster explained he did not see the cuts as ‘messy’ as the labor market is expected to remain strong, with wage growth set to pick up and mortgage rates still relatively low (albeit rising) .

“With the economy expected to grow around 3.6% this year, and around trend (2.5%) next year, we see the unemployment rate falling further from here,” he said. he wrote.

“Wage growth will pick up as unemployment declines, but should only strengthen gradually. That said, as wage pressure increases, the RBA will be more comfortable with inflation staying in the target range for a long time.

And if the RBA is confident that inflation is sustainably within its target range of 2-3%, it has said it will raise the cash rate.

Worries about access to credit are growing

However, the NAB Residential Property Index, which reflects the opinions of real estate professionals on prices and rents, showed different expectations from the industry.

Survey respondents predicted a 3% rise over the next 12 months and a 1.7% slope over the next 24 months.

During the third quarter of 2022, NAB survey respondents had predicted a 4.3% increase over the next 12 months and a 3.8% increase over the next 24 months.

But rising construction costs amid labor shortages and supply constraints have been flagged as a “very big” hurdle for new homes.

Worries over access to credit and rising rates also rose sharply in the December quarter, with the biggest influence on buyers in NSW and Victoria.

Real estate professionals have also identified lack of inventory and price levels as key barriers for buyers of existing properties nationwide. However, lack of stock was a bigger issue in Western Australia, while price was a bigger concern for buyers in Victoria and NSW. Both issues were important to Queensland buyers.

The NAB Residential Property Index fell to 59 points in the December quarter, well above the 16 point average, but slightly down from the 60 points in the September quarter. Declining house price growth had pushed the index down from a high of 71 points in the June quarter.

Sentiment was highest in the Northern Territory (at 83 points, down from 67 points in the third quarter) and lowest in Victoria (48 points, down from 44 points in the previous quarter).

The index is only expected to continue to fall, with NAB predicting that it will reach 56 points in one year and 47 points in two years.

Market confidence levels among property professionals also moderated, with the 12-month confidence measure falling for the third straight quarter to 56 points from 62 in the three months to September.

The 24-month measure also fell for the third consecutive quarter, falling to 47 points from 59 in the previous quarter. But that matched the survey average of 46 points.

Housing market confidence for the next 12 months remained highest in NT (up nine points to 92 points) and ACT (down 25 to 75 points) – although they captured smaller samples.

Tasmania had the lowest confidence levels, at 44 points. Confidence had slackened in all other states except Victoria (although its level of 52 points was relatively low).

The two-year confidence measure was also highest in the NT and ACT. Long-term trust levels were lowest in Queensland (down 18 to 39 points), Tasmania (up five to 44 points) and New South Wales (down 20 to 44 points ).



Mortgages are loans that are used to purchase homes and other real estate where the property itself serves as collateral for the loan.


Mortgages are loans that are used to purchase homes and other real estate where the property itself serves as collateral for the loan.

The NAB predicts a turning point in house prices at the end of 2022

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Last update: February 10, 2022

Posted: February 10, 2022