Experts say banks and credit availability hold the key to the soft property market for the next two years

Housing experts say the property market should remain soft for at least two more years – and it’s banks that hold the key.

Stockland managing director Mark Steinert spoke at a Citi investment conference this week and said the market has returned to a more normal level after five years of boom and will stay in a low-growth pattern until after the next federal election and beyond the end of next year.

“It’s all about credit availability,” he said.

“Ultimately the banks hold the key here.”

“Their capacity for really changing that is limited, with a big focus from the Australian Prudential Regulation Authority and the Reserve Bank on household debt.”

“It will be a lot easier if we can get a lot more clarity for borrowers so they know what they will get in the envelope…it takes two to three times longer to get a loan…and some of that is about people learning what all the requirements are for example household expenditures.”

Citibank Australia’s head of mortgages risk Stuart Veitch also spoke and said that clarity on credit lending and supply was not likely to improve in the next year or two.

“Precisely what the expectations are around expense clarifications are still not clear, banks are having to second guess and get in early…until we get some experience with what we see and a credit decision process, there will be messiness around that,” he said.

“It will be 12 to 24 months before banks give more clarity.”

According to CBRE’s residential chairman Justin Brown, inquiries to buy homes have dropped off significantly since the start of the year, reflecting the property market cooling.

“What we found surprising, coming into this year was inquiry levels were still very high, but in the last couple of months, it has dropped off significantly, it all comes down to confidence…it’s not that the buyers that aren’t there, but the confidence is more weighted,” he told Australian Financial Review.

“In real terms it will be around this time next year that we will see more light at the end of the tunnel.”


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