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Units markets concerned Westpac since 2012

AAP logoAAP 9/12/2016 Stuart Condie

Westpac's "antennae went up" over signs of oversupply in some city centre apartment markets as far back as four years ago, chairman Lindsay Maxsted has said.

Mr Maxsted played down concerns of an impending crash in values but told the lender's annual general meeting in Adelaide that the bank was paying especially close attention to the Melbourne and Brisbane apartment markets.

"This bank has been watching city apartments very closely for many many years - probably I suspect around 2012 our antennae went up," Mr Maxsted said.

"We're particularly looking at Melbourne city centre apartments, Brisbane city centre apartments. We don't think there's a speculative bubble in there but we watch it very closely and we are selective as to which developers we bank."

In October, the Reserve Bank warned an emerging oversupply of Brisbane and Melbourne apartments was already hitting settlements, while ANZ chief executive Shayne Elliott last week said there would soon be a shortage of buyers for "smallish" units in those cities.

Westpac chief executive Brian Hartzer denied his bank had a blacklist of postcodes in which it imposes stricter lending criteria as a matter of course, but acknowledged the lender's focus on maintaining asset quality.

"We don't put restrictions on postcodes but we look at individual buildings and individual developers and come to a view about where we want our exposures and where we don't," Mr Hartzer said.

"But we don't have blanket bans on postcodes as has been suggested."

ANZ is among the bodies reported to have such a list.

"We think fundamentally the housing market is pretty strong and that a lot of what is going on has been underlying demand not being met by supply," Mr Hartzer said.

"There will be an individual project or two that will have specific problems but we don't feel as a bank overly exposed."

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