Further APRA crackdowns loom as September quarter house price growth sizzles

The heat is on state governments and banking regulators to take more heat from the property market after figures show house price growth more than doubled in the last three months of 2016 in Melbourne and Sydney.

Low interest rates and a lack of housing supply have driven Melbourne’s house prices up 6 per cent over the September quarter.

This week the Reserve Bank released the minutes from its March board meeting and made clear mention of the build-up risks associated with the housing market.

The RBA is concerned about rising property prices in Melbourne and Sydney, apartment oversupply, growing investor lending and rising household debt.

Commonwealth Bank economist Gareth Aird told Sky News it could lead to more crackdowns from banking regulators.

“These comments coupled with the RBA’s acknowledgement that there has been a build-up of risks associated with the housing market could be interpreted as the bank calling on APRA to further place restrictions on lending to investors,” he said.

“In other words, watch this space.”

The Housing Industry Association’s chief economist, Harley Dale, said it was a bad idea to implement a blanket tightening of lending conditions.

“There is some need to tighten lending conditions for some Australian housing markets in terms of geographical areas and dwelling types,” he told Australian Financial Review.

“However, a blanket tightening of lending conditions – as now seems to be emerging again – is the wrong policy and risks damaging Australia’s financial stability.”

“That is the very opposite to the ideal outcome authorities want to achieve.”


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