Commonwealth Bank boss Matt Comyn reveals when house prices will hit rock bottom

The boss of Australia’s biggest home loan lender is holding on to forecasts that national house prices will bottom out “well into 2027”.

The Commonwealth Bank has previously said it is expecting a 9 per cent fall in prices and chief executive Matt Comyn on Wednesday said that remained the view of the bank’s economists.

“That’s still the published forecast,” Mr Comyn told ABC radio.

“But they would also be looking to see if, at the moment, they still have rates on hold from this point.

“But I think, clearly, that will be a live decision that will be revisited if there is, or after the quarterly inflation data.

“So I think most likely that will be reviewed around the November timeframe.”

After the Reserve Bank last week lifted the official cash rate to a high not seen since late 2011, AMP offered a grim outlook — especially for homeowners who bought at the top of the red-hot market — and forecast home prices could plunge by as much as 15 per cent.

Under this scenario, national home values would plunge by $139,971, but in Sydney house prices would plummet by $241,057, leaving recent borrowers battling mortgage stress with the disaster of severe negative equity where they owed their bank more than their home was worth.

The falls would be significantly worse than the downturns of the early 1980s during a year-long recession and a pre-COVID slump.

Westpac and ANZ both expect the RBA to move higher again when it meets in November as it works to rein in inflation, which has remained outside the 2 to 3 per cent target band for more than a year.

Rising rates, along with the Albanese Government’s radical changes to capital gain tax has spooked both owner-occupiers and investors, has seen an immediate impact on house prices.

Asked when he expected to see the bottom of the latest downturn, Mr Comyn said it was hard to be precise, but he expected it to be well into 2027.

“It’s also worth saying that you know, of course, people watch house prices very closely,” he said.

“It’s the majority of Australian household assets and wealth. House prices fell by just over 8 per cent in 2022, 2023 on a national basis, and, of course, would be up something in the order of 60 per cent over seven years.”

His comments come the same day The West Australian revealed that nearly one in four new borrowers opted for interest-only home loans in the three months to June.

New data from the Australian Prudential Regulation Authority shows 23.5 per cent of borrowers in the June quarter went on interest-only loans, worth $47.5b.

While investors typically have the lion’s share of interest only loans, separate data shows existing interest-only loans belonging to owner-occupiers is worth a massive $51.5b, up 13 per cent from $45.8b a year ago.