By Scott Murdoch
SYDNEY, Nov 2 (Reuters) – Westpac CEO Anthony Miller said 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% decline in house prices in the year to March 2027.
The lender said mortgage applications fell 15% 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 said 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 it would scrap generous property tax concessions, a move analysts said has contributed to falling house prices.
Westpac reported net profit excluding notable items of A$6.99 billion ($4.91 billion) for the year ended September 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% 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% in just seven months.
The Reserve Bank of Australia is widely expected to raise interest rates on Tuesday to 4.85%, an 18-year high, following four increases this year.
Financial markets imply nearly a 90% probability of a hike, with a 20% chance that interest rates could reach 5.1%..
Westpac said 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% to A$864 million. Total provisions for potential loan losses increased 4.2% 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 77 Australian cents per share.
The bank’s core net interest margin, a key measure of profitability, slid 5 basis points (bps) to 1.76%, while its CET1 ratio, a measure of spare cash, slipped 7 bps to 12.46%
($1 = 1.4225 Australian dollars)
(Reporting by Scott Murdoch in Sydney, Sherin Sunny and Shivangi Lahiri in Bengaluru; Editing by Edmund Klamann, Deepa Babington and Sherry Jacob-Phillips)
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