Not reading The West Australian. The last thing Australian banks need right now is for house prices to slump as they are in the United States and Britain so the ANZ Bank economist Alex Joiner can be forgiven for playing down the likelihood of that happening. High interest rates would deter anxious buyers from pushing prices higher, Mr Joiner confidently predicts, but strong demand from aspiring home owners would also prevent prices from falling. "We might see some of the steam and the frenetic activity come out of some housing markets, but in aggregate we do not expect prices to drop."

There are plenty of recent Australian homebuyers with borrowings of 90% or more of their purchase price who will hope his forecast proves correct but the evidence is mounting that things might not turn out so benign. In Western Australia, where real estate prices really boomed over the last four or five years, the downwards correction is already well under way. The Real Estate Institute of WA says 17,584 homes and blocks of land are listed for sale, up from about 5000 just 18 months ago and the highest number of homes on the market in 12 years. Institute President Rob Druitt says the 2.7 per cent fall in the median house price for the March quarter from $470,000 at the end of last year to $457,000 was caused by the combination of interest rate rises, a drop in overall consumer sentiment and the record number of listings.