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🇦🇺 Australia /Economy & Trade

Australia’s housing affordability crisis could take a generation to fix, NAB economist says

From ABC Australia · () English

Translated from English and summarized by DistantNews. Read the original for the full story.

At a glance

News Named sources Context piece
  • NAB forecasts a peak-to-trough decline of about 7% in dwelling prices across Australia’s combined capital cities, including an estimated 5% fall during 2026.
  • Chief economist Sally Auld said lower prices alone would not solve affordability problems, which require a sustained increase in housing supply.
  • Westpac economist Luci Ellis linked high prices relative to incomes to decades of low inflation and financial deregulation.

A fall in Australian house prices may offer relief to some buyers, but it will not fix the country’s housing affordability crisis, NAB chief economist Sally Auld told a Senate inquiry.

NAB expects dwelling prices across the combined capital cities to fall about 7% from peak to trough, including a decline of around 5% during the 2026 calendar year. Auld said the forecast drop would not deliver meaningful improvements in affordability without a long-term increase in housing supply.

While some will welcome the drop in prices, this will not solve Australia’s housing affordability issues.

· Sally AuldThe NAB chief economist told a Senate inquiry that falling property prices alone would not resolve affordability problems.

“This is a challenge that is likely to take the better part of a generation to resolve,” Auld said before the Senate select committee on intergenerational housing inequity. She said house prices had risen much faster than incomes since around the start of the century, citing lower interest rates, taxation settings and strong demand among the contributing factors.

Meaningful improvements in affordability will only be achieved through a sustained increase in housing supply over a long period of time.

· Sally AuldAuld described the long-term supply increase she said Australia needs.

“Housing affordability is one of Australia’s most significant economic and social challenges,” Auld said.

Westpac chief economist Luci Ellis, a former Reserve Bank assistant governor, also appeared before the committee. She said the inflation-targeting framework introduced in the early 1990s and banking deregulation during the 1980s and 1990s had helped drive the long-term rise in property prices relative to household incomes.

This is a challenge that is likely to take the better part of a generation to resolve.

· Sally AuldAuld assessed the likely time needed to address Australia’s housing problems.

Lower inflation after the recession of the early 1990s brought down average nominal interest rates, Ellis said. That allowed Australians to service larger mortgages relative to their incomes, contributing over time to larger loans, bigger deposits and higher house prices compared with household earnings. She described the trend as a “multi-decade consequence” of lower inflation and financial deregulation.

Housing affordability is one of Australia’s most significant economic and social challenges.

· Sally AuldAuld characterized housing affordability during her evidence to the Senate committee.
About this summary

Originally published by ABC Australia in English. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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