Source: Kieran Clair, realestate.com.au
Westpac chief economist Bill Evans says regulators are set to get tougher on investor loans.
Westpac chief economist, Bill Evans, said a nervous regulator will look to ease investor activity in the property market during 2017.
Speaking in Brisbane today at an Australian Property Institute event, Mr Evans said high house prices fuelled by investor demand are causing concern for the Reserve Bank of Australia.
"We find ourselves with a high increase in house prices and a worried central bank with considerable concern about over-leverage in the housing sector," he said.
"What they'll be doing next, I believe, is they'll implement another round of macro-prudential controls and I have little doubt the investor will be under the microscope for this."
Mr Evans suggests lowering loan-to-value ratios for investors, increasing the capital the banks need to hold against investor loans and capping growth in each bank's investor loan book are all possible.
"Over the course of the next six months no interest rate cuts, no interest rate increases but certainly a focus on investor lending to try and contain those pressures in the housing market," he said.
Despite the moves, Mr Evans said talk of a 'housing bubble' is overstated and the analysis doesn't indicate a lack of affordability in the sector.
He said that housing affordability as serviceability-to-debt measure is running at about the long-term average.
"There's no, what I would call, 'major threat' out there to say that house prices have gone too far and we're about to see a major bursting of the bubble.
"Even if they raise rates by one per cent you'd be back at the 10 years average level of affordability still pretty safe."
Mr Evans said the relative affordability of Brisbane compared to southern capitals is good news for the city's real estate and is starting to fuel demand from Sydney buyers.
"The risk is it's fine to be more affordable, however if you're going to be more affordable you've got to offer the jobs as well, and that's been where Queensland is falling down."
Mr Evans said, however, a recent upswing in population growth for Queensland could indicate the shift is underway.
"It may well be that this huge gap that Brisbane has in terms of affordability is starting to at least stabilise the slowdown in population growth, because without population growth, you can't get real growth."
