Australian Home Buyers Hesitate as Housing Market Continues to Fall

Australian home buyers are adopting a wait-and-see approach as the housing market continues to decline. House prices have dropped 6.4% in 2026, according to property data from Cotality, driven by high interest rates, rising living costs, and recent federal tax changes. Steve Laidlaw, chief executive of People First Bank, notes that potential buyers are hesitating to see where the market stabilizes, which is also creating uncertainty among sellers.

Laidlaw predicts a potential 10% reduction in housing prices, though some analysts suggest it could reach 15%. The Reserve Bank of Australia recently raised the official cash rate to 4.6%, its highest level in 15 years, which major banks have passed on to customers in the form of higher mortgage rates. Laidlaw expects some borrowers may face repayment challenges, but People First Bank is prepared to support affected customers.

Despite a strong financial year with loan growth, demand has started to soften. People First Bank reported a 10% increase in profit to $48.7 million for the year ended June 30, with total loans and advances growing 8% to $22.8 billion. The bank, formed by the merger of Heritage Bank and People's Choice Credit Union in 2023, added 36,000 new members, bringing its total to 750,000. Laidlaw emphasizes the bank's customer-focused approach, free from shareholder pressures, allowing it to offer competitive rates and strong service.