The Australian Prudential Regulation Authority has revealed it will lay out how it may intervene in the property market over the next couple of months,which could include limits on how much home buyers can borrow from the banks. This follows concerns from major banks,the International Monetary Fund,OECD and the Reserve Bank that the surge in prices is leading to financial instability.
Data to be released on Friday by CoreLogic is expected to confirm home values across the country continue to outstrip income growth despite major capital cities going into lockdown to stop the spread of the Delta coronavirus variant. Through the first 28 days of September,dwelling values in Sydney climbed by 1.7 per cent to be 23 per cent higher than a year ago. In Melbourne,values have climbed by 0.7 per cent through September to be 15 per cent higher than at the same time last year.
At its regular quarterly meeting,the Council of Financial Regulators – made up of the RBA,the Australian Securities and Investments Commission,the Australian Prudential Regulation Authority and federal Treasury – noted house prices were rising “briskly” and may pose risks to the economy.
“The recent lockdowns have reduced transactions and new listings,but prices are still rising briskly in most markets,” the council said in a statement. “The council is mindful that a period of credit growth materially outpacing growth in household income would add to the medium-term risks facing the economy,notwithstanding that lending standards remain sound.”
Loading
APRA has the capacity to impose so-called macroprudential rules on banks,such as imposing limits on particular types of lending or tightening income-to-loan ratios. The council said macroprudential policy responses were discussed and APRA would publish an information paper on a framework for implementing these controls over the next few months.
Boththe OECD and theInternational Monetary Fund have called on Australian regulators to step in to cool the booming Sydney and Melbourne property markets by tightening lending standards. RBA assistant governor Michelle Bullock has alsowarned soaring housing debt could be a financial risk and Treasurer Josh Frydenberg has raised concerns about rising risks in the housing market.