NAB Chief Economist Opening Statement to Senate Select Committee

3 September 2026 
Economy and Markets  Housing

Thank you Chair and Committee members for the opportunity to appear today.

Housing affordability is one of Australia's most significant economic and social challenges. It is increasingly shaping economic opportunity, wealth accumulation and living standards across different generations of Australians.

House prices have risen much faster than incomes since around the turn of the century, driven by factors including lower interest rates, taxation settings and strong demand. 

Fundamentally, though, housing affordability is a supply-side issue. 

Productivity in housing construction has deteriorated materially, with the Productivity Commission estimating around 50 per cent fewer dwellings are produced per hour worked than was the case in the mid-1990s.

At the same time, the housing market is now adjusting to significant taxation changes announced in the 2026 Federal Budget.

Also important is the broader macroeconomic backdrop and the risk of further interest rate increases. 

July CPI data indicated inflation remains sticky and an ongoing challenge for the Reserve Bank. We now expect the cash rate to increase 25 basis points in September to 4.6 per cent. Risks remain tilted toward a further increase in November, should economic activity prove more resilient than expected. 

In this environment, we forecast a peak-to-trough decline in dwelling prices of around 7 per cent across the combined capital cities, equivalent to a fall of around 5 per cent during the 2026 calendar year.  

While some will welcome the drop in prices, this will not solve Australia’s housing affordability issues. Meaningful improvements in affordability will only be achieved through a sustained increase in housing supply over a long period of time. This is a challenge that is likely to take the better part of a generation to resolve. 

The scale of the challenge also means that every level of government has a role to play. Federal, state and local governments all influence housing outcomes through planning systems, infrastructure provision, taxation policy, regulation and housing delivery. There is no single policy lever that can solve this issue on its own - governments of all levels need to work together, with the support of business and industry. 

NAB acknowledges our role. 

We are backing industry innovations that help drive housing supply and we’re helping first home buyers to enter the housing market.

We have long advocated for action to improve housing affordability for all Australians and we will continue to do so. 

I look forward to discussing these issues with the Committee today.