‘Prices are still going down’: Westpac boss expects Australian house prices to fall by 10 per cent
Australia’s four banking heavyweights predict property prices will drop dramatically as the COVID-19 pandemic continues to ravage the market.
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ALL of the big four bank bosses are expecting house prices across the country to fall by at least 10 per cent in the next 12 months.
Westpac boss Peter King and National Australia Bank boss Ross McEwan both said on Friday they expected double-digit falls to property prices over the next year.
Mr McEwan said he expected a fall “somewhere between 10 and 15 per cent reduction in mainly in the large cities”.
“Prices have come off a wee bit over the last months but not dramatically … but in some other country areas we don’t see much change whatsoever,” he said.
“You’re also seeing some increase in certain areas where people are deciding long term that will live there.
“They will do a decent commute or less time commuting because they are working from home.”
All the big four bosses have appeared before a parliamentary committee over the past week to discuss how the bank has responded to the COVID-19 pandemic.
Westpac’s chief executive officer Peter King said he also expected house prices to fall in the next 12 months during to the economic fallout from the COVID-19 pandemic.
“What we have modelled is from the start of the crisis – so from April – and we are toying in about the 10 per cent range,” he said.
“Prices are still going down is our forecast but slightly less than 10 per cent is where we are at.”
He said so far prices have fallen by about 3 per cent.
These comments by the two bosses mirror those made by the Commonwealth Bank’s chief executive officer Matt Comyn and ANZ’s chief executive officer Shayne Elliott last week.
Despite this, latest CoreLogic figures showed house prices nationally delivered positive growth in the past 12 months.
In Sydney they climbed by 11 per cent, Melbourne 6 per cent, Brisbane 4.3 per cent, Adelaide 6.7 per cent, Perth 2.1 per cent, Hobart 11.4 per cent, Darwin 8.4 per cent and Canberra 7.9 per cent.
The latest median values in each city included Sydney at $986,000, Melbourne $782,000, Brisbane $558,000, Adelaide $481,000, Perth $462,000, Hobart $512,000, Darwin $476,000 and Canberra $716,000.
Mr King said they have provided loan deferrals to more than 138,000 mortgage customers and over 30,000 small businesses.
At their peak of loan deferrals $50 billion in mortgages at Westpac was deferred and this is now down to about $30 billion.
After customer check-ins were made with these customers about 50 per cent said they would start making repayments again.
NAB has deferred repayments on 77,000 home loan accounts and 37,000 business loan accounts.
Since June check-ins have been made with about 40,000 customers and 15 per cent have started paying their loans again.
During the pandemic CBA customers have deferred more than 250,000 loans totalling $60 billion.
ANZ has about 84,000 customers who have taken out mortgage deferrals, of these about 70 per cent are owner occupier borrowers.
Originally published as ‘Prices are still going down’: Westpac boss expects Australian house prices to fall by 10 per cent