NAB now expects a 5% price fall in 2026, but entry-level homes are barely moving: what it means for first home buyers

NAB has just deepened its call on where Australian house prices are heading this year, and the headline number looks alarming: the bank now expects the eight capital cities to fall around 5% over the rest of 2026, more than double its earlier forecast of a 2% decline. But look past the national average and a very different story is unfolding underneath it, one that matters far more if you are trying to buy your first home rather than watching from the sidelines.

What NAB actually revised

In its August 2026 Housing Monitor, NAB pointed to recent dwelling value data as the trigger for the downgrade. Sydney and Melbourne are expected to lead the correction, with the bank flagging cumulative falls of up to 10% from their respective peaks before any recovery. Mid-sized capitals such as Brisbane, Adelaide and Perth are forecast to see smaller falls, in the order of 2% to 4%.

The most recent monthly figures give some sense of how far along that correction already is. Sydney dwelling values fell 1.4% in July and now sit roughly 5.3% below their January peak. Melbourne fell 1.2% over the same month and is down about 5.5% from its March 2022 peak. NAB expects prices to level out in early 2027 before a modest recovery later that year, as lower interest rates begin to provide support.

The part the headline number hides

Here is where it gets more interesting for first home buyers specifically. The correction is not spread evenly across the market. Recent data shows homes in the priciest quarter of the market fell about 3.2% over the three months to July, while homes in the most affordable quarter of the market actually rose approximately 0.3% over the same period.

• Prestige and larger properties are absorbing most of the fall, since these purchases lean more heavily on borrowing capacity, and higher rates bite hardest on the biggest loans.
• Entry-level and more affordable homes are holding their value, because buyers at this end of the market keep competing for a limited supply of properties within reach of a typical deposit and income.
• This is a reminder that a national or city-wide average forecast does not automatically translate into a discount on the kind of property a first home buyer is actually shopping for.

What this means for first home buyers

A falling national forecast can feel like good news if you are saving for a deposit, but the data suggests the opportunity is smaller and more specific than the 5% headline implies.

• If you are targeting an entry-level property, do not assume the market-wide forecast applies directly to your price bracket. Track prices in your specific suburb and property type rather than relying on the national or capital-city average.
• If you are house-hunting in Sydney or Melbourne, the larger forecast falls there may be worth factoring into your negotiation approach, particularly for properties above the median price.
• A softer market can also mean less competition at open homes and auctions, which may be just as valuable to a first home buyer as any change in price.
• Whatever the market does over the next year, it is worth checking your own borrowing capacity and budget against a range of price and rate scenarios rather than trying to time the exact bottom.

As always, a mortgage broker or buyer's agent can help you read how these forecasts apply to the specific suburbs and property types you are considering.

Run the numbers

Use these tools to see how a softer market, or a steadier one at the affordable end, could affect your own first home buying plan:

• Borrowing Power Calculator - check how much you could borrow at today's rates before you start comparing entry-level listings.
• Am I Ready to Buy? - get a quick read on whether your deposit, income and buffer stack up before you jump into a softening but still competitive entry-level market.
• Rent vs Buy Calculator - model whether it makes more sense to buy now at the affordable end or keep renting and saving while prices settle.