Westpac chief executive Anthony Miller says house price surge shouldn’t be ‘demonised’ ahead of predicted rise

Perth property values are tipped to climb around eight per cent on average next year, with the head of Australia’s second largest bank declaring house price rises shouldn’t be demonised because they help the economy. Westpac Bank chief executive officer Anthony Miller says his bank is still anticipating two interest rate cuts next year, but concedes there is still some way to go before inflation reaches an acceptable level. “We’re forecasting house prices across Australia up approximately 10 per cent through 2026. We would expect Western Australia will be similar,” Mr Miller told The West Australian during a visit to Perth. “There would be, I think, based on history and most recent data that we’ve assessed, likely a higher increase in some of those key regional centres adjacent to big natural resource projects, just because that challenge of supply and demand is slightly more acute there.” A recent consumer sentiment index published by Westpac, recorded a 12.8 per cent increase month-on-month, the biggest jump in seven years, which the banking boss credits with the comfort property owners had knowing their house values were rising. “So, it’s important that we don’t demonise house prices and the increase in house prices too much, because it does have a quite an important impact on the economy,” he argues. The Westpac boss says he is so far standing by the bank’s prediction that the Reserve Bank will make two further interest rate cuts next year, but says it’s possible there could only be one. “If it’s wrong, it’s not going to be three rate cuts. It’s actually going to be less than two rate cuts,” he said. “You know, the bias is that it’s still some way to go to get to where we need to get to, in terms of that inflation level”. The Westpac boss also declined to criticise Labor’s first home buyers deposit scheme as being to blame for a recent increase in property prices. “We’ve seen ongoing demand in October and November - what I would say is that I don’t think that’s the driver, in of itself, of the price increases that we’ve seen,” he said. “But there’s no doubt about it, that if you don’t have enough supply to meet demand, there is going to be some pressure on prices. “I just don’t think we can sort of pin the increase in house prices entirely to that first home buyer scheme. What we really need to do is just build more houses at the right price point.”