NAB predicts modest house-price drop but warns affordability will take a generation to improve

Speaking before the Senate select committee on intergenerational housing inequity, Sally Auld of NAB forecasted a peak-to-trough fall of about 7 % in dwelling prices across Australia’s capital cities, equating to a 5 % drop in 2026. She warned that even a price decline will not resolve the country’s deep-seated affordability problem, which she said will take “the better part of a generation” to remedy through expanded housing construction.

Westpac chief economist Luci Ellis linked the current price-to-income gap to decades of low inflation and banking deregulation that lowered nominal interest rates and boosted borrowing power. Ellis also noted that strong skilled-migration inflows add pressure on limited housing stock. Greens senator Barbara Pocock and Liberal senator Andrew Bragg highlighted issues such as shrinking public housing, approval-completion mismatches, and rising building costs that squeeze developers’ margins. Auld mentioned additional factors like recent interest-rate hikes, Middle-East geopolitical uncertainty, and new tax measures affecting the sector.