High employment is the key factor in keeping Australian property markets strong in the face of price decline in Sydney and Melbourne, according to lender Bankwest.

Bankwest managing director Rowan Munchenberg says that provided employment continues to be as strong as it is, the price correction in the biggest cities will not create problems.

“Employment still remains high and while that is the case, despite flat wage growth, it will be the key for economic prosperity and the ability for people to pay off their debt,” he says. “While unemployment remains low we are in a good place.

“Internally we plan for multiple scenarios around what’s happening in the marketplace and what’s happening with house prices whether it be further decline, being level or some increases. We’re not seeing any evidence of anything falling off a cliff.”

Munchenberg says the bank, like the rest of the sector, has reined in investor lending due to APRA regulations. “That has had a pricing effect and a demand dampening effect across the industry,” he says.