The Australian housing market recorded its fastest annual growth since April 2004 and there is even a spark of life in the investor market – is this good news or bad?
Over the past 12 months many in the media have claimed we are in a housing bubble and called for regulators to intervene, to stop risky lending.
Scratch the surface though and it appears, while regulators are closely monitoring property and lending standards, there is no real evidence of drop in lending standards.
As the Reserve Bank of Australia stated in its latest Statement of Monetary Policy “Given the environment of rising housing prices and low interest rates, it is important that lending standards are maintained. The Bank is monitoring trends in housing borrowing carefully.”
It may well be that realities calm the market before regulators need to intervene, as Corelogic recently said “The 16.1% lift in national housing values over the past year is the fastest pace of annual growth since February 2004, however the monthly growth rate has been trending lower since March this year when the national index rose 2.8%.”
And, while the investor segment is growing, at one-tenth of its earlier peak, there’s little sign of speculators causing a housing bubble.
Brokers have confirmed to Accredited Broker that lending standards have been maintained and even reinforced; with the latest Covid lockdowns, many lenders are now doing their due-diligence with employment checks.
But while the above implies calm, the Reserve Bank remains optimistic about the economy (and by default the property market). Last week, it stated:
“The experience both in Australia and overseas is that the recent lockdowns have been less damaging to the economy than the lockdowns in the first half of last year. This is because business models have adapted to restrictions on activity, and the restrictions themselves have generally become more targeted now that more is known about how the virus is transmitted. Past experience has also shown that when virus outbreaks are contained and restrictions are eased, spending bounces back as consumption possibilities return.
The Australian economy is expected to bounce back”.
Undoubtedly, finance and property are in for a quieter few months until we reach higher vaccination levels. But the banks will keep lending on sound mortgages and people will have enough income to buy a house