Westpac CEO Peter King has indicated that the Australian housing market is experiencing a period of moderation, a sentiment echoed by Westpac Group's chief economist, Luci Ellis. Ellis described the current phase as an "air pocket" rather than a crash, attributing it to a combination of tight monetary policy and recent tax changes. This has led to weak demand despite credit remaining readily available, and a significant decline in mortgage applications.
Indeed, Westpac's first-quarter profit rose by 5%, reaching A$1.9 billion ($1.4 billion), driven by growth in home loans and institutional lending. However, the bank's profit for the six months through March missed estimates, with income rising 3% to A$3.4 billion ($2.4 billion). The softening housing market is a key concern, with home loan credit enquiries falling to levels last seen in late 2022, declining at around 4% monthly.
Westpac anticipates a 20% decline in housing turnover this year. Although the Reserve Bank of Australia (RBA) is expected to maintain current cash rates, the combination of fiscal and monetary policies is powerfully impacting the housing sector. While a crash is not anticipated, the market is becoming more of a "buyer's market," with falling auction clearance rates in major cities like Sydney and Melbourne, and increasing stock on the market relative to sales.
