There are two things that impact Australian residential real estate prices the most. They are government policy and bank lending standards. Demand and supply are no doubt the ultimate drivers on price, that’s not disputed. But if we take the logic further and look at what drives demand and supply, we usually always come back to the actions of the various government departments in managing supply and the actions of bank regulators in managing demand.
The two forces are effective in managing real estate price growth in Australia because we are also a relatively small market. The big four banks still control a vast majority of residential mortgages. There has been growth in smaller lenders, but not to the scale that you would see in the UK or US. Brokers are also a large distribution channel, which means regulators can make it harder or easier for a handful of banks and brokers with large effect.
So it’s no surprise to hear bank bosses, particularly at CBA, starting to sound caution on house price growth. The big banks would prefer regulators to step in and apply some tightening – not too much, but just enough to make life even harder for smaller lenders who generally find market share in riskier loans.
Given the strong run in house prices over the past two years, particularly since the banking royal commission wound down and especially after the record low cuts to rates following the pandemic, we’re likely to see more regulation around lending in the coming months. This will be effective in slowing down the rate of house price growth.
Diese Geschichte stammt aus der November 2021-Ausgabe von Money Magazine Australia.
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Diese Geschichte stammt aus der November 2021-Ausgabe von Money Magazine Australia.
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