Australian Banks

Research evidence excerpt

Australian Banks

Macquarie Equity Research Australian Banks

Prior to the tax changes announced in the budget (see Capital Pain) the housing market

was already showing signs of slowing, weighed on by RBA rate hikes and an uncertain macro

backdrop. We expect this slowdown to continue, and potentially accelerate, following the

budget changes. Longer-term we will be closely watching household house price expectations

(right hand chart below), if the tax changes drive a material reduction in household house

price expectations there could be a more material long-term impact on the Australian

housing market and credit growth.

Figure 4 - Capital city dwelling prices vs auction Figure 5 - Consumer expections and capital city

clearance rates dwelling prices

4 30 90 30 Monthly z-score Monthly %

25 annualised (%) annualised (%)

3 80

20 20

15 2

10 10

5 60

0 0

-5 -1

-10 -10

40 -2

-15

-20 30 -20 -3

2010 2012 2014 2016 2018 2020 2022 2024 2026 2013 2015 2017 2019 2021 2023 2025

Home Prices Auction clearance rate Home Prices Consumer house price expectations (RHS)

Source: Cotality, Macquarie Macro Strategy, Macquarie Research, May Source: Cotality, Melbourne Institute, Westpac, Macquarie Research, May

2026 2026

Importantly, these tax changes will be relatively more impactful today, because ~40% of

new lending flows are from investors (the highest since 2016), with ~80% of those for

established housing. In the near-term, we expect investor flows into established housing

to slow materially - potentially by >50%. While there may be some offset from increased

flows into new housing, this will likely be limited by the capacity of the construction sector to

deliver this stock.

Figure 6 - New home loans (ex-refi) by buyer Figure 7 - Investor home loans (ex-refi) by purpose

% share $bn

60 50