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The implications of a housing slowdown - NAB
10 August 2026
Economy and Markets Housing
Key points
- We expect house prices to fall ~7% peak to trough, a sharp slowdown from the 8.8% growth over 2025.
- Declines of that magnitude are not outside recent experience, but they do support our forecast for below trend GDP growth. In this note, we identify how housing transmits to the broader economy.
- We expect weaker credit demand, especially for investors, tighter borrowing capacity, slower dwelling investment, and softer consumption. Estimates generally find a 10% fall in dwelling prices subtracts ~1ppts from consumption growth over a couple of years.
- Elevated construction pipelines in QLD, WA and SA mean near-term completions will be insulated, but also, that construction activity may respond more slowly.
- While conditions in the established market have softened, rental markets remain tight and homebuilding input costs are likely to support housing CPI this year. Cooler demand should help ease broader inflation in 2027.
- For the RBA, below trend growth is necessary amid elevated inflation. Monetary policy will not be a circuit breaker for the housing cycle this year.
- The shift in credit demand is still important. The RBA’s assessment of financial conditions has been sensitive to housing lending. Housing dynamics both reflect and complement somewhat restrictive RBA policy.
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