This week, concerned about a property bubble, all the key movers and shakers ‘ganged up’ on property investors.
First, the Reserve Bank, said that recent regulatory hurdles were no longer calming down rampant investor investing. Then ASIC said we were in a property bubble such that finally Treasurer Scott Morrison said that “pressures have built up again” in the housing market and he had asked the regulators to consider “the levers they have,” to calm the market.
All this came on the back of both Sydney and Melbourne continuing to show growth of over 10 per cent in the last year – much of this driven by investors who have come roaring back into the market despite the Australian Prudential Regulation Authority (APRA) having placed a speed bump in the way of investor lending.
All the investor growth headlines may-or-may-not be true; if you own property in Pymble you may think you are in a property bubble. But if you live in the Pilbara you probably think the bubble burst two or three years ago.
And herein lies the problem; if you are a Westpac borrower in Adelaide you would be pretty miffed that interest rates have gone up because the RBA is concerned about an overheating Sydney market – your market is not overheating.
So, what’s next? The Libs have ruled out both removing negative gearing as well as Labor’s proposed removal of Capital Gains Tax exemptions.
And, as the zoning of land for residential development is determined by the states, don’t expect any major increases in supply that will bring prices down.
Cue APRA and ASIC; thankfully the investigations they have both been carrying out into different aspects of the lending market over the past couple of years means that they know where the mortgage risks are.
APRA’s and ASIC’s knowledge level is now unprecedented. I wonder whether they have enough to develop sophisticated that target specific overheating markets….?
It’s not necessarily the end of the road for property investors. It just depends which road they are on.