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National Australia Bank Ltd (ASX:NAB) saw its share price rise by 0.61% to $38.17 on Friday, continuing a strong week for the major banks. Over the past five days, NAB shares increased by 3.12%, while other big banks also performed well: Westpac Banking Corp (ASX:WBC) saw a 3.05% rise, Commonwealth Bank of Australia (ASX:CBA) lifted 1.34%, and ANZ Group Holdings Ltd (ASX:ANZ) spiked 2.78%. This contrasts with a modest 0.47% gain in the S&P/ASX 200 Index (ASX:XJO).
In a recent update, NAB’s Economics team has revised its forecast for the national housing market, predicting a 6.7% average increase in home values across capital cities for 2024, followed by a more moderate 4.3% growth in 2025.
Perth and Adelaide Expected to Outperform
According to NAB, Perth is set to lead the housing market with the highest value increases for both 2024 and 2025, with a projected rise of 23.1% in 2024 and 8.3% in 2025. Adelaide is expected to see similar growth, making it one of the top performers. This forecast builds on Perth’s 15.2% growth in 2023 and 3.6% in 2022. Currently, the median house price in Perth is $808,038, while the median apartment price stands at $540,546.
Insights from NAB’s Chief Economist
Alan Oster, NAB’s Chief Economist, noted that strong housing demand continues to outstrip supply, with new construction expected to remain below trend. He highlighted that the regional growth patterns are likely to persist, with Perth, Brisbane, and Adelaide expected to outperform Sydney and Melbourne.
Oster also pointed out that rental markets are experiencing pressure due to the supply-demand imbalance, leading to strong rent growth despite a slight slowdown.
Interest Rate Outlook
NAB anticipates a soft landing for the economy and expects interest rates to remain stable until at least May 2025, with a possibility of an earlier cut. The cash rate is projected to decrease from the current 4.35% to around 3% over the following 12 months. However, Reserve Bank Governor Michele Bullock indicated that a near-term rate cut is unlikely, defining "near-term" as the end of this year and the next six months.
NAB Shares Performance
NAB shares have performed well, rising 23.2% year-to-date, outpacing the ASX 200, which has gained 5.9% in the same period.
NAB’s forecast highlights strong performance expected in Perth and Adelaide, with broader national growth anticipated to slow in the coming years.
