NAB House Price rises
NAB predicts house prices will rise this year, and next. Source: Canva
  • Utilising CoreLogic, NAB and SQM Research data, the property boom is unpacked
  • Dwelling values and construction activity is still growing strongly
  • NAB forecasts double digits price growth for 2021, more growth for 2022

NAB‘s latest State Economic Review revealed that house prices and dwelling construction have continued to grow strongly.

Using a variety of different data from respected property research groups, including CoreLogic and SQM Research – in addition to their own price forecasts – NAB have analysed dwelling investment, capital city vacancy rates, rents growth, home values, and dwelling approvals.

Dwelling investment, Q4’19 = 100

NAB dwelling investment
Source: NAB Research.

Dwelling investment has risen across the board, with only Victoria and WA yet to fully recover to 2019 levels. These figures are only expected to increase as investors make a return to the housing market in large numbers.

Capital city vacancy rates

Source: NAB Research and SQM Research.

Sydney’s vacancy rate has started to decline, with some areas having zero vacancy rates. Melbourne’s vacancy rate is also falling, but some suburbs have many available rentals.

CoreLogic Home Value Index (Jan’14 = 100)

Source: NAB Research and CoreLogic.

It should come as no surprise to anyone who follows the property market that home values have risen strongly across all major cities – driven by a raft of government stimulus, pend up pandemic demand and historically low interest rates.

However, as can be seen (in the chart above), despite the recent run up on prices in cities such as Darwin and Perth, prices are still below 2014 levels.

Dwelling approvals (3-month average, index Jan’20 = 100)

Source: NAB Research.

Meanwhile, there has been a new home construction boom, kicked off by the government’s HomeBuilder scheme.


NAB Hedonic Dwelling price forecasts

Source: NAB Research.

NAB has utilised their own ‘hedonic index’ to forecast dwelling prices. It is clear that at the height of the pandemic in 2020, dwelling prices were expected to temper compared to pre-Covid. However, within a few months the forecasts had flipped with double-digit growth expected for 2021 (despite low levels of incoming migration).

Furthermore, NAB predicts that dwelling price growth will still be strong next year (averaging +5.8%), but will decline by more than half compared to the height of the boom this year (+14.1%).

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