The head of a mortgage aggregation group says the prudential regulator could have used tax controls to curb investor lending growth in key markets.
Vision Aggregation director Matthew Ivers said he would have liked to have seen APRA use stamp duty and potentially land tax to control the growth of investor lending in areas that it wanted to target.
“Stamp duty could have been doubled for investors in New South Wales, for example, and the government could have got the money,” he told The Adviser.
“I think it’s difficult with the mandate to actually do that, but realistically the issue is in Sydney and Melbourne – Sydney in particular – so why wouldn’t you drill down into the main problem?”
Mr Ivers said first-time purchasers – not first-time investors – could have been subsidised to them get a foothold on the property ladder.
“That would’ve been my preference, because I think it’s an unfair consequence of the APRA guidelines."
Mr Ivers said that there will be thousands of people who put down a deposit for off-the-plan property before APRA’s new investor guidelines took effect, only to realise down the track that they won’t be able to afford it.
“There are a lot of people who go to brokers before purchasing off-the-plan, and good brokers would inform them about the risks involved, but there are also a lot of people who just rock up and buy off the plan at 10 per cent,” he said. “They might be a first-time purchaser and they might’ve had a pre-approval from the bank, just on the back of the envelope.
“They’re going to come up to settle and they’re going to find, because of APRA’s restrictions, that the banks have changed their criteria, so they can’t afford to purchase it.
“I think that’s a very terrible thing, and one APRA should be thinking about.”
Mr Ivers is not the only one voicing his disapproval of APRA's macroprudential methods.
Dr Andrew Wilson of Domain Group believes APRA’s claims of an overheating market have not yet been proven and that the motives behind its decision require greater scrutiny.
“I don’t think we’ve had a full and a detailed modelling and explanation as to the nature of the policy shift and the details as to the actual quantities that have been determined that would be a so-called 'risky level' of investor lending in our market,” he said.
RE/MAX Australia and New Zealand managing director Michael Davoren recently warned that the investor lending crackdown may have unpredictable consequences.
“There is a very real danger in applying a national remedy to a problem that is not national,” Mr Davoren said.
“There is no boom evident in most places outside Sydney and Melbourne – and even within those markets, it’s not in all suburbs,” he said. “There should be more engagement with financial and real estate industries before decisions are reached.”
[Related: Regulate other lending sectors, says Haron]
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