Shock as big four bank doubles housing crash forecast

Westpac issued its housing market update Friday. One of Australia’s biggest banks has doubled its national housing price crash forecast within the space of just three months, with one capital alone plunging double digits wiping out years of gains. Westpac’s latest Housing Pulse report released Friday afternoon saw a drastic downgrade in its outlook – flagging national home values will fall 6 per cent this year – which is double its previous -3 per cent drop prediction made in June. Historically low listings are what’s standing in the way of a complete market crash. There will be more to come though, with the bank now expecting a total peak-to-trough national price drop of 7.3 per cent – a figure that matches the severe downturn seen during the 2022 rate-hiking cycle. Westpac head of Australian macro-forecasting Matthew Hassan warned the housing market was in a highly fragile phase now as the shock of higher borrowing costs hits slowing buyer demand. “Markets were already at risk of hitting an ‘air pocket’ as the downdraft from rate rises combined with heightened uncertainty,” the report said. “A steeper drop in activity could see ‘thin’ trading conditions, raising the risk of more ...