Weekly Real Estate News
Summary
Westpac forecasts a 10.9% peak-to-trough decline in Australian dwelling prices between March 2026 and March 2027. Its November 2 full-year results show credit impairment charges rising 104% to A$864 million, while fourth-quarter mortgage applications fell 15% year over year. The impairment figure covers the bank's overall lending book, not only home loans.
Australia’s housing downturn is beginning to show up in the forecasts and credit costs of one of the country’s largest mortgage lenders. Westpac Banking Corporation expects national dwelling prices to fall 10.9% from their March 2026 peak to March 2027, while the bank’s full-year credit impairment charges more than doubled.
The forecast appeared in Westpac’s 2026 full-year investor presentation, released with the bank’s November 2 results in Australia. The financial results cover the year ended September 30, 2026; the house-price projection extends into 2027. The announcement was dated November 2 in Sydney, corresponding to November 1 in the U.S. Mountain time zone. Westpac did not specify an exact release time.
A 10.9% Price Decline Is Westpac’s Forecast, Not an Observed Loss
Westpac’s historical comparison puts its projected 10.9% peak-to-trough fall above four earlier Australian housing corrections since 2008. The largest of those in its table was an 8.6% decline between July 2017 and May 2019. Westpac also forecasts a 25% fall in housing turnover and a slowdown in housing credit growth from 7.5% to 3.8% during the current cycle.
Those figures are forecasts, not completed market outcomes. Westpac characterizes the correction as broadly consistent with previous cycles in its underlying drivers, even though its projected price decline is larger than the historical episodes it compares. Actual prices may follow a different path if rates, employment, policy or buyer demand change.
The bank projects an 8% fall in national dwelling prices during calendar 2026, followed by a 2% rise in 2027. Its city-level projections vary: Sydney is forecast to decline 12% in 2026, Melbourne 8%, Brisbane 4% and Perth 2%. These annual estimates are distinct from the March-to-March peak-to-trough projection.
Mortgage Applications Weaken
Westpac reported that its average monthly mortgage applications in the fourth quarter of fiscal 2026 were 15% below the comparable period a year earlier. The latest quarterly average remained about 4% above the corresponding five-year average, according to the investor presentation.
The slowdown comes as higher borrowing costs and changes affecting property investors weigh on demand. In a separate October housing-market report, Cotality reported that national dwelling values had already fallen 6.7% from their March peak, while combined capital-city values were down 8.1%. Cotality’s observed index and Westpac’s forward-looking forecast should not be treated as the same measure.
Credit Impairment Charges Double, but Not All Are Mortgage Losses
Westpac recorded A$864 million in credit impairment charges for the year ended September 30, compared with A$424 million a year earlier, an increase of approximately 104%. The figure covers the bank’s lending exposures across business lines; it should not be presented as mortgage defaults or losses attributable solely to housing.
The bank reported statutory net profit of A$6.813 billion, down 1% from A$6.916 billion in fiscal 2025. Profit excluding notable items was A$6.992 billion, essentially flat year over year. Total loans rose 5% and customer deposits increased 6%, while Australian housing lending excluding the RAMS portfolio grew 7%.
In its official earnings announcement, Westpac said it helped more than 190,000 Australians buy homes during the year and reiterated a target to facilitate A$100 billion in housing-related lending by 2030. Chief Executive Anthony Miller said elevated interest rates are likely to persist into 2027 and acknowledged mounting pressures on some households and businesses.
Why It Matters Beyond Australia
The bank’s outlook adds a lender-level perspective to the latest Australian price data: weaker mortgage applications and rising provisions can accompany falling property values even while a major bank remains profitable and continues growing its loan book. That distinction matters for assessing financial-system resilience rather than assuming a housing correction automatically becomes a banking crisis.
The figures do not establish a similar forecast for the United States. Mortgage structures, monetary policy, household leverage and housing-market supply conditions differ materially between the two countries.
