Australian home buyers pause as housing market uncertainty grows

Australian home buyers are adopting a wait-and-see approach as the housing market continues to decline, influenced by high interest rates, rising living costs, and recent tax changes. Steve Laidlaw, CEO of People First Bank, noted that potential buyers are hesitating to purchase until the market stabilizes, which is also affecting sellers.

Laidlaw predicts a potential 10-15% drop in housing prices, though he believes the actual decline may be less severe. Data from property firm Cotality shows a 6.4% fall in house prices in 2026, creating challenges for first-home buyers, investors, and owners with loans exceeding their property values.

The Reserve Bank of Australia recently raised the official cash rate to 4.6%, its highest level in 15 years, leading to higher mortgage rates from major banks. Laidlaw cautioned that borrowers are experiencing rates not seen before, with the possibility of further increases.

Despite softer loan demand and limited growth affecting major banks, People First Bank, Australia’s largest customer-owned bank, remains optimistic. The bank reported a 10% rise 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’s focus on customer service and community support sets it apart from shareholder-driven institutions.