Australian home buyers pause as housing market continues to decline

Australian home buyers are adopting a wait-and-see approach as the housing market continues to decline. House prices have dropped by 6.4% in 2026, according to property data firm Cotality, driven by high interest rates, rising living costs, and federal tax changes. Steve Laidlaw, chief executive of People First Bank, noted that potential buyers are hesitant to enter the market until they see where prices stabilize.

Laidlaw predicts a potential 10% to 15% reduction in housing prices, though he believes the actual decline may not be as severe. The Reserve Bank of Australia's recent increase in the official cash rate to 4.6%, its highest level in 15 years, has further tightened borrowing conditions. Larger banks have passed on this rate hike to customers, increasing mortgage rates and adding financial strain on borrowers.

People First Bank, Australia's largest customer-owned bank, reported a 10% increase in profit to $48.7 million for the 2025/26 financial year. Total loans and advances grew by 8% to $22.8 billion, while total assets expanded by 7% to $27.1 billion. The bank added 36,000 new members, bringing its total to 750,000. Laidlaw emphasized the bank's ability to weather market headwinds due to its challenger status and focus on customer service.

The bank's merger in 2023 between Heritage Bank and People's Choice Credit Union has positioned it to prioritize customer needs without the pressure of shareholder expectations. Laidlaw highlighted the bank's commitment to offering competitive rates and strong service while supporting local communities.