Home buyers are holding off to see where the falling Australian housing market lands as high interest rates, stubborn living costs and federal tax changes weigh on valuations.
After a strong financial year of loan growth at People First Bank – Australia’s largest customer-owned bank – demand has begun to soften, chief executive Steve Laidlaw says.
“I think absolutely people are holding back in terms of potential purchases just to see where the market lands, and of course, it’s creating some hesitancy potentially on the sell side as well,” he told AAP.
“Potentially, you’re talking about a 10 per cent reduction in housing prices, and I’ve read others are saying potentially 15 per cent.
“I suspect it won’t be as pronounced as that.”
House prices have fallen 6.4 per cent in 2026, according to property data firm Cotality, dividing aspiring first home buyers, property investors and some new owners with loans worth more than their houses.
The Reserve Bank of Australia last week increased the official cash rate to 4.6 per cent, its highest level in 15 years.
Bigger banks have passed the rise on to customers in the form of higher mortgage rates.
“For many borrowers, I think this is the first time they’ve experienced rates at this level with the potential for another rate rise, and some are saying potentially two,” Mr Laidlaw said.
“I would expect there to be some pressure around credit, and people in some sort of repayment distress, but the bank is very well prepared to support customers experiencing some of those challenges.”
While shrinking home loan demand and limited growth were weighing on major bank valuations, Mr Laidlaw said People First’s challenger status left it well-positioned to weather the current market headwinds.
“We can often perform better than the general market off of a smaller base, so if there is some moderation in terms of lending growth, we can certainly manage that,” he said.
People First handed down its 2025/26 financial results on Tuesday, which showed its bottom-line profit rose by roughly a 10th to $48.7 million in the year ended June 30.
Total loans and advances grew eight per cent to $22.8 billion, while total assets expanded seven per cent to $27.1 billion as the bank added 36,000 new members, taking its ranks to 750,000.
“We’ve only got the one stakeholder, so we don’t have that tension between shareholder expectations regarding profits and dividends,” Mr Laidlaw said.
“We can put our entire focus into our customers with good rates and strong levels of service, but also do the right thing by the communities in which we live and work.”
Formed when Heritage Bank and People’s Choice Credit Union merged in 2023, People First Bank now has joint headquarters in Adelaide and Toowoomba.
Australian Associated Press is the beating heart of Australian news. AAP is Australia’s only independent national newswire and has been delivering accurate, reliable and fast news content to the media industry, government and corporate sector for 85 years. We keep Australia informed.
