Westpac Bank chief executive Brian Hartzer says house prices have further to fall
Westpac Bank’s chief executive Brian Hartzer sounds a warning that Australian house prices have even further to fall.
Westpac Bank’s chief executive Brian Hartzer says Australian house prices do have further to fall, but the market is a fair way off any alarming price drop or funding crisis.
Mr Hartzer told The Australian he expected a moderation rather than a sharp downturn in the house prices and mortgage growth, as unemployment and interest rates remained low and the domestic economy continued to grow.
“People that bought houses five years ago have had a huge run up in value and the fact that prices have come off a bit in Sydney and Melbourne, and maybe will come off a bit more, is nothing to be alarmed about,” he said.
“Investor demand that had been quite hot has slowed down … When you unpack the trend what you are seeing is it is overwhelmingly a drop off in investor appetite — relative to owner occupiers and first home buyers — that is the softening.”
Sydney’s housing prices have fallen 7.4 per cent during the past year, the worst 12-month result since 1990 when the Hawke government was in power and interest rates hit 17 per cent. Melbourne’s housing values were down 4.7 per cent.
But Mr Hartzer said population growth and continued demand for housing would support the market over the medium to long term.
“You can get volatility in the prices but I just don’t think people should become overly alarmed,” he added. Someone who is buying a house to live in it for the medium to long term I don’t think needs to be overly concerned.
“Interest rates are relatively low, which supports stability and value, unemployment is very low which means people can continue to pay their loans … if you look at household formation relative to new housing stock there continues to be a deficit of somewhere around 200,000 units.”
Mr Hartzer is also suggesting a milder slowdown in mortgage growth than his rival at ANZ Shayne Elliott who expects credit growth could halve to 2-3 per cent annually as the market cools.
“These dynamics are likely to lead to housing credit growth easing to 4 per cent next year, with total credit growth of 3.5 per cent,” Mr Hartzer said.
Last week, Mr Elliott said while he expected a further pullback in the housing market, he didn’t however, see “significant falls” in domestic house prices.
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