Billionaire apartment developer Harry Triguboff says any move by the Reserve Bank to curb residential property lending and take the heat out of investor activity could seriously damage confidence in Australia’s housing market.
The RBA was a powerful body in people’s minds, Mr Triguboff said.
“It would 100 per cent scare the housing market,” he said.
In its Financial Stability Review this week, the RBA signalled it could restrict banks’ lending to the housing sector in a bid to ward off a housing bubble and the flow-on risks to the banking sector. The bank said it was in discussions to take “further steps to reinforce sound lending practices, particularly for lending to investors”. Mr Triguboff said: “Suddenly the RBA has changed its mind; they hear the geniuses from overseas telling them what to do. This is very bad. They shouldn’t be scared of being different from them, they should be pleased we are different (that Australian housing markets are doing well).”
Mr Triguboff’s Meriton, which builds only apartments, was this week named Australia’s most prolific home builder in a Housing Industry Association survey, with almost 8000 units under way in the year to June, up from 2600 the year before.
Mr Triguboff said surging prices were confined to Sydney and Melbourne.
About 60 per cent of Australia’s property market had moved little in recent years, he said.
House prices in Sydney jumped 16.2 per cent in the year to August, while Melbourne’s prices rose 11.7 per cent, according to researcher RP Data. However, Canberra’s residential prices edged up only 1.4 per cent for the 12 months, Hobart rose 2.8 per cent, Perth 3.5 per cent, Brisbane 5.4 per cent and Adelaide 5.9 per cent.
Mr Triguboff said prices in Surfers Paradise were the same as 10 years ago, while upper-end Gold Coast homes that had sold for $3 million or more were now worth $2m.
Coastal areas and cities such as Adelaide, where price growth has been slow, would be hardest hit if bank lending to housing was restricted or conditions applied to investor lending, he said: “Areas that are not good will completely die.”
Mr Triguboff said people should be concerned when property prices did not go up, not when they did.
“We should worry about that just as much because when it does not go up, supply dries up,” he said.
Mr Triguboff joined other bankers and developers in saying there would be unintended consequences from any crackdown on bank lending to the housing sector. If confidence faltered, land prices would fall and the site owners would hold on to the properties until prices recovered, in turn compounding the housing undersupply, he said.
Mr Triguboff also noted that any restrictions on Australian bank lending would penalise domestic and lower-price-range buyers and provide an advantage to offshore purchasers.
He said Chinese buyers (local Chinese and mainland Chinese) — which are driving sales and prices in some suburbs — tended to put down larger deposits, with mainland Chinese buyers often borrowing more offshore.
Meriton sells a large chunk of its apartments to Australians of Chinese descent and mainland Chinese buyers.
This article first appeared in The Australian.