There’s lots of talk about the Australia’s housing bubble again over the last week and another call to stop negative gearing.
However the Australian Prudential and Regulation Authority (APRA) says it remains calm about Sydney and Melbourne’s property markets, despite concerns raised by the Treasury and the RBA about a housing bubble, according to Fairfax Media.
Chairman Wayne Byres told senators in Canberra he had the power to use policies that target specific housing markets in Australia – such as Sydney and Melbourne – to prevent bank lending practices from becoming too loose.
Byres believes that the warning he gave to Australian banks last year is still having an effect.
He was quoted as saying by Sydney Morning Herald:
“They’ve been co-operative in terms of changing practices. At the time we sent our letter, the growth in investor lending was about 10% but it was accelerating, it was heading towards 11%, 12%, 15%,”
“It’s still hovering around 10% [but] we’re arguing around the decimal point here, 10.3%, 10.4%, so I think we’ve had some moderating impact and I suspect we’ll have some more moderating impact over the coming months.”
He said APRA was prepared to do more to cool investor activity but it didn’t seem necessary at this stage.
The comments follow warnings by Treasury Secretary John Fraser, who on Monday said Sydney’s housing market was showing “unequivocal” signs of a housing bubble, as were upmarket areas of Melbourne.
However Treasurer Joe Hockey weighed into the argument saying that record low interest rates were encouraging new investment in housing supply across Australia, and this was to be welcomed.
Mr Hockey said:
“If there is a concern about elevated house prices, Sydney or parts of Melbourne, then the best way to respond is with increased supply,”
“What you’re seeing in the National Accounts is clear evidence that there is a significant increase in the supply of housing, and that’s to be welcomed.”
My Byres also agreed with Treasury, the RBA, and the Australian Securities and Investments Commission officials that there ought to be closer scrutiny of the interest rates banks are charging on their credit cards, because the current “spread” between the official cash rate and rates charged on credit cards was at record levels.
I’ve recently written about how more can more can be done to keep excessive credit card interest rates under control – here.