Australian home buyers pause as housing market declines sharply

Australian home buyers are adopting a wait-and-see approach as the housing market continues to decline. Property data firm Cotality reports a 6.4% drop in house prices in 2026, driven by high interest rates, rising living costs, and federal tax changes. Steve Laidlaw, CEO of People First Bank, notes that potential buyers are hesitating to make purchases until the market stabilizes, creating uncertainty for sellers as well.

Laidlaw predicts a potential 10% to 15% reduction in housing prices, though he believes the actual decline may be less severe. The Reserve Bank of Australia's recent cash rate hike to 4.6%, the highest in 15 years, has further pressured borrowers. Laidlaw anticipates some credit strain and repayment distress among homeowners but assures that People First Bank is prepared to support affected customers.

Despite broader market challenges, People First 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, formed from the merger of Heritage Bank and People's Choice Credit Union in 2023, now serves 750,000 members with headquarters in Adelaide and Toowoomba.

Laidlaw highlights the bank's customer-focused approach, emphasizing good rates, strong service, and community support. 'We've only got the one stakeholder, so we don't have that tension between shareholder expectations regarding profits and dividends,' he said, underscoring the bank's ability to navigate current market headwinds effectively.