Key takeaways
The NAB has amended its forecasts for both house prices and interest rates for 2025.
NAB does not expect interest rates to fall until at least May 2025
While the housing market has cooled a little, NAB still expect positive, albeit slower, property price growth next year.
The NAB has amended its forecasts for both house prices and interest rates for 2025.
Alan Oster, NAB Group Chief Economist explained the bank made a slight adjustment to their property price forecasts for 2024 (which is obviously almost over).
Recent data showed prices were a bit softer than the NAB initially expected.
But looking ahead to 2025, NAB anticipates overall property price growth to slow to 4.2 per cent over 2025, but again the markets will be fragmented.
While the NAB still expect positive, albeit slower, property price growth next year, the great thing about property is you can always outperform the markets.
The strong demand for property isn’t going anywhere, especially with population numbers staying high.
On the other hand, even though we’ve seen a lift in new housing completions and a stabilisation in new building approvals, it doesn’t look like we’ll see the market rebalance anytime soon according to Oster.
On a broader scale, NAB is expecting a relatively smooth adjustment for the economy.
Yes, growth has slowed down, largely due to weakness in the private sector, but NAB thinks the second half of 2024 will mark the lowest point.
By 2025, we should see growth picking back up to more typical levels according to NAB forecasts.
The job market has been surprisingly steady, and while the NAB does foresee unemployment inching up to around 4.5%, that’s still better than pre-COVID rates.
For the Reserve Bank of Australia, keeping inflation in check while maintaining a strong job market will be the key focus areas moving forward.
The NAB has also changed its rate cut forecast from February 2025 to May 2025.
This comes after the latest unemployment rate came in steady at 4.1% for October.
Even though this was widely expected, it does challenge the RBA’s forecast track of the unemployment rate increasing to 4.3% in Q4 2024.
