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Targeting property investors "unnecessary": REIA

Targeting property investors "unnecessary": REIA

targeting property investors
by Staff Reporter 1 comments

The peak real estate body has slammed moves by Australia’s two key finance regulators to introduce tighter controls on housing loans and target property investors.

The Australian Prudential Regulation Authority (APRA) has announced it will closely monitor "higher-risk mortgage lending", such as high-LVR loans, interest-only loans to owner-occupiers and loans with very long terms.

Meanwhile, the Australian Securities and Investments Commission (ASIC) has said it will investigate interest-only loans due to concerns about “higher-risk lending”, following strong house price growth in Sydney and Melbourne.

The Real Estate Institute of Australia (REIA) said the regulators’ actions are a threat to first home buyers, whose market share dropped to 12 per cent in the September quarter.

REIA CEO Amanda Lynch said tighter controls on housing loans are “totally unnecessary” and a “blunt instrument” that strikes the entire market rather than one or two hotspots.

“The trend for this latest quarter… is a cooling-off of the market nationally – even Sydney is coming off a high this quarter,” Ms Lynch said.

“You only have to look at the minutes of the Reserve Bank board meetings to know that concerns about a rise in property prices relate primarily to Sydney and, to a lesser extent, Melbourne.”

Ms Lynch said the regulators’ moves are the first step towards ‘macroprudential tools’ or new lending rules, which the REIA opposes.

“We know from the New Zealand experience that moves such as these disproportionally affect first home buyers, and APRA’s decision comes at a time when first home buyer levels in Australia have hit a record low,” she said.

“It was only last month that the Reserve Bank of New Zealand announced that it would be winding back its macroprudential measures after it became clear that it was shutting first home buyers out of the market.

“We need to learn from these overseas experiences and not jump to knee-jerk reactions.”

Targeting property investors "unnecessary": REIA
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