National Australia Bank has slashed its house price outlook after the downturn spread across more cities and gathered speed. The bank now expects median dwelling values in Sydney and Melbourne to fall about 10% from peak to trough, while mid size capital cities are projected to drop between 2 and 4%.
Across all capital cities combined, NAB forecasts prices to fall around 5% over 2026, a significantly weaker view than before. Just a month earlier, it had pencilled in a national decline of only 2%.
Conditions have deteriorated quickly across almost every mainland capital. Property prices are retreating in most major cities, and the pace of falls is picking up rather than easing.
In July, national dwelling values slipped 0.7%, based on data from Cotality. That monthly fall is the steepest since December 2022.
Analysts at other institutions now lag NAB’s more bearish stance, as the bank responds to the latest market evidence. The sharper downgrade for Sydney and Melbourne suggests larger, more expensive markets are bearing the brunt of the correction.
Smaller capitals still face softer falls. The shift from a mild national downturn to a deeper slide in just a month shows how volatile 2026 is shaping up to be.
