Big four bank boss warns of ‘significant change’ in 2025

The head of National Australia Bank’s lending division expects ‘significant change’ in 2025 for the housing/mortgage market.

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A key executive at one of Australia’s top four banks – NAB head of home lending Denton Pugh – says it’s going to be “a year of change for Australia’s property market, sharing his take on the year ahead for mortgages and housing below:

As we kick off a new year, many Australians are asking the same familiar questions – where are house prices heading, and when will conditions improve for buyers?

While challenges remain, 2025 is shaping up to be one of significant change – with interest rate relief expected, shifts in buyer behaviour, and a much-needed focus on housing supply.

For those watching and waiting to enter the market for the first time, this could be the year the tide starts to turn.

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NAB executive general manager Denton Pugh says it’s tough for those trying to get into the housing market.

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The big news this year is the Reserve Bank of Australia (RBA) is likely to start cutting rates.

After years of higher rates, cuts are expected to provide welcome relief for households while also helping many buyers increase their borrowing power.

We’ve already seen some good news on inflation with key measures showing it’s heading in the right direction. Headline inflation has been sitting within the RBA’s target range for three months in a row – a milestone we haven’t seen since 2021. This data gives us confidence Australia’s central bank will start cutting rates by May, and perhaps earlier.

Higher rates over the past few years have stretched borrowing power, pricing some Australians out of the market. While this can create opportunity for buyers who are ready and able to act, it’s tough for those trying to get their foot on the property ladder.

Buyers that have managed to get a property should see some relief this year.

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In response, Australians have been getting creative when it comes to home ownership. Some families are pooling their resources, with siblings buying their first home together. Others are opting to rent-vest – renting in the area they want to live while purchasing an investment property in a more affordable location as their first step into the market. We’re also seeing buyers expand their search, looking at more affordable suburbs or exploring property types like townhouses and apartments instead of stand-alone homes.

Overall, we’re expecting house prices to grow by just over 4 per cent this year, with cities like Perth, Adelaide, and Brisbane likely leading the way. Sydney and Melbourne are likely to continue growing at a slower rate, but we anticipate stronger growth in the second half of 2025 if rate cuts come as expected.

Those waiting on the sidelines could see this as their year to make a move.

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While there’s hope for buyers in 2025, we can’t ignore the bigger picture. Housing affordability and supply are long-term challenges that need long-term solutions. It’s encouraging to see governments prioritise housing, but there’s still a long way to go. Initiatives to boost supply are a step in the right direction, but rising costs and feasibility are slowing progress.

There’s no simple fix, solving Australia’s housing challenges will take collaboration across the board.

Business, government, and community groups need to work together to create more opportunities for Australians to find affordable homes.

Overall, 2025 presents a mix of challenges and opportunities. The good news is there are more homes on the market now than we’ve seen in a while, which provides greater choice. However, with affordability still tight, it’s more important than ever to stick to your budget and buying criteria.

Historically, when rates start to fall, we see confidence and activity lift in the market. While this cycle may not bring the same dramatic changes we’ve seen in the past, it’s worth keeping a keen eye on the market as rates come down and activity increases. For those who’ve been waiting on the sidelines, this could be the year to make your move.

**NOTE: The author, Denton Pugh, is National Australia Bank’s executive for home lending.