Australian Property Experts Forecast 4.2% House Price Decline Over Next 12 Months

Australian property professionals expect house prices to decline over the next year as confidence in the residential property market weakens, according to NAB’s latest quarterly residential property survey. Respondents forecast a 4.2% fall in annual house prices over the next 12 months, reflecting growing concerns about the direction of the housing market.

The survey, covering the September quarter of 2026, found that NAB’s Residential Property Index fell for the third consecutive quarter, entering negative territory for the first time in six years. The decline was primarily driven by weaker house price expectations, while rental growth expectations remained broadly unchanged.

Property Market Sentiment Weakens

NAB’s survey of around 228 property professionals found that more respondents viewed their local housing markets as declining compared with the previous quarter.

In the September quarter, 53% said their local market was declining, up from 33% in the June quarter. Meanwhile, 14% believed the market was starting to decline, down from 25%. The share of respondents who thought the market was approaching the bottom increased to 13%, from 4% previously.

These findings suggest that expectations have become more cautious, although views on the stage of the market cycle remain mixed.

Rental Growth Expectations Remain Elevated

While house price expectations weakened, rental prices are still expected to increase over the coming years.

Respondents forecast annual rental growth of 3.7% over the next 12 months, down from 3.9% in the previous quarter. For the following two years, expected rental growth eased to 4.0%, compared with 4.3% previously.

NAB’s index measures property professionals’ views on house prices and rents through a weighted calculation of their net expectations. The survey includes real estate agents, property developers, asset and fund managers, and property owners and investors.

Interest Rates and Construction Costs Remain Challenges

Owner-occupiers continue to represent the largest share of buyers in both established and new housing markets, while the share of local investors has declined since late 2025.

Construction costs remain the main constraint on new housing developments, with interest rates now the second-largest concern in that segment. Interest rates remain the leading concern in the established housing market.

The survey also found that two-thirds of respondents considered stamp duty a barrier for first-home buyers and newer entrants to the market.

What Investors Should Watch Next

Investors may monitor upcoming housing data to see whether weaker price expectations translate into actual declines, while rental growth, borrowing costs and construction expenses remain important factors shaping the outlook.

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