House prices in Australia’s capital cities are falling, and one major bank has weighed in on what that means before a government committee.
Westpac chief executive Brian Hartzer and chief financial officer Peter King were questioned as to whether the major bank is “concerned” by the nationwide drop in house prices by a government committee on Friday.
Mr Hartzer noted that in Sydney and Melbourne, there was a “very substantial run-up in house prices over the last five, six, seven years”, and so people who purchased their homes four to five years ago are “still well-ahead”.
“When we look at the level of equity in our portfolio relative to the loans, there’s still quite a lot of equity support in people’s homes,” Mr Hartzer said,
Mr Hartzer was also asked how far house prices would need to fall before Westpac begins to worry. For Mr Hartzer, it would take a “big spike in unemployment” for Westpac to hold significant concerns.
“Any fall is a concern, particularly for people who made an investment in housing, so we don’t like to see a fall,” he said.
“But... there’s a positive sense of it as well, which means more first-time home buyers can get into the market," he said.
Big ticket markets like Melbourne and Sydney rounded out 2018 having experienced the biggest price drops since the GFC. For all of 2019 so far, house prices have been steadily declining across the board, creating pockets of investment opportunity for buyers.