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Recent comments by the RBA and APRA that further home loan lending restrictions may be required nationally should raise alarm bells in Western Australia, according to one industry pundit.
CEO of Professionals Shane Kempton said both the central bank and regulator have overseen tougher lending requirements over the past year in an effort to cool property prices in Sydney and Melbourne.
“APRA, in particular, believes that the blowout in property prices in both these capital cities, combined with increasing lending to investors, could put the financial sector at unnecessary risk,” Mr Kempton said.
“New measures imposed by APRA to curb lending include limiting the flow of new interest-only lending to 30 per cent of total new residential mortgage lending.
“These measures following out-of-cycle interest rate increases imposed by the major banks over the past year.
“While there could be a case for curbing lending growth in the boom capital cities of Sydney and Melbourne, the case cannot be made for the Perth market.”
Mr Kempton said the Perth real estate market is still in recession.
“There are currently more properties listed for sale in Perth than Sydney with a major bigger population,” he said.
“Over the past [year,] house prices in Perth fell by around 4 per cent, whereas in Sydney they surged by over 18 per cent.”
Mr Kempton said implementing a national policy of tightening mortgage lending could not come a worse time for WA, as it tries to recover from the mining downturn and the “unfair” carve-up of GST revenue.
“The fortunes of the Western Australian economy should matter to all Australians because the state is the power house of the national economy,” Mr Kempton said.
He said WA accounted for 41 per cent of Australia’s merchandise exports, to countries including the UK, Hong Kong, China, Japan and Korea, in 2016.
“The property sector is a key part of the domestic economy in Western Australia and the policymakers need to take a state-by-state approach when imposing tighter lending restrictions.”
“A ‘one fit all’ approach could detrimentally undermine the fortunes of Australia’s biggest export.”
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