Westpac expects housing values to be “resilient” over the next 3-5 years, notwithstanding evidence of decline in some markets in Sydney and Melbourne.

The bank’s chief executive Brian Hartzer says the slowdown in property values in Sydney and Melbourne has been “orderly” so far, and he says a shortage of housing stock, compared with a growing population, will ultimately mean that housing values will remain resilient.

Westpac, the country’s biggest lender to landlords, says it expects demand for loans from property investors to remain “weak,” but first-home buyers are stepping into the housing market in increasing numbers.

“From a housing market point of view, although we’ve seen some prices come down, we view it as the first steps in an orderly slowdown,” he says. “So we think prices will come down a little bit more from here, but we don’t expect a big drop in house prices. “They’ve had the biggest run-up over time, so it’s not surprising that they’re coming back a bit.”