I am sorry about the jargon. I started my professional life as an interbank ES cash trader, but I have rarely had to explain what it involved...
APRA has been riding the OZ banks hard on domestic residential exposures for the last ten years and they are running surplus capital specifically against this contingency. I would expect a sharp fall in home prices to trim bank earnings, but I wouldn't expect it to threaten their capital adequacy.
I am fine with the idea of arguing over a good red!