Westpac CEO says buyers waiting for lower prices as housing downturn deepens

[SYDNEY] Westpac CEO Anthony Miller said that prospective Australian homebuyers were waiting for house prices to drop further, suggesting the housing market downturn could be prolonged.

The bank, Australia’s second-largest home lender by assets, warned of a housing market downturn steeper than any seen in nearly two decades, forecasting a 10.9 per cent decline in house prices in the year to March 2027.

The lender noted that mortgage applications fell 15 per cent in the September quarter from a year earlier, although they remained above the five-year average for the period.

“The first-home buyers applications are still down, but that is to be expected and is appropriate when there’s been four rate rises, another on the way, and the expectation that house prices have further to fall,” Miller told Reuters in an interview. “Unless they absolutely have to buy then those people are going to wait.”

Miller pointed out that investor mortgage applications were also lower, although demand from owner-occupier buyers had started to recover in recent months.

The Australian government said in May that it would scrap generous property tax concessions, a move analysts said has contributed to falling house prices.

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Westpac reported net profit excluding notable items of A$6.99 billion (US$4.91 billion) for the year ended Sep 30, in line with a Visible Alpha consensus estimate and marginally above the A$6.97 billion reported in 2025.

National home prices fell 1.2 per cent in October from September, according to research firm Cotality. Capital-city home values were falling at their fastest in 40 years, Cotality said, with prices down 8.1 per cent in just seven months.

The Reserve Bank of Australia is widely expected to raise interest rates on Tuesday to 4.85 per cent, an 18-year high, following four increases in 2026.

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Financial markets imply nearly a 90 per cent probability of a hike, with a 20 per cent chance that interest rates could reach 5.1 per cent.

Westpac said that higher interest rates, coupled with elevated fuel prices and geopolitical volatility, are creating some stress across its lending portfolio.

Credit impairment charges for the year rose 104 per cent to A$864 million. Total provisions for potential loan losses increased 4.2 per cent to A$5.2 billion, according to the bank’s financial records.

The bank increased provisions in sectors including solar farms, renewable energy, transport and property services, Miller said, adding that Westpac held no major direct or indirect exposure to the A$3.4 billion collapse of Bathla, a major Sydney property developer.

Westpac kept its final dividend unchanged at A$0.77 per share.

The bank’s core net interest margin, a key measure of profitability, slid 5 basis points (bps) to 1.76 per cent, while its CET1 ratio, a measure of spare cash, slipped 7 bps to 12.46 per cent. REUTERS