APRA’s ‘one size fits all’ lending curbs are dangerous: HIA

Acknowledging figures from the Australian Bureau of Statistics (ABS) that showed that housing prices in Australia’s capital cities grew by 10.2 per cent over the year to March 2017, Mr Garrett said there was, however, evidence that in the months since then, price growth had cooled.

“Since March 2017, dwelling price growth has slowed following the introduction of additional restrictions by APRA [the Australian Prudential Regulation Authority] and increased barriers to foreign investor participation imposed at federal and state level,” he said.

Adding that dwelling price growth in markets outside of Sydney and Melbourne had been “much weaker” in the first quarter of 2017, Mr Garrett said the solution to the country’s “considerable” housing affordability challenge lies in creating a “sufficient supply” of new properties in a “more cost effective manner.”

He added: “We are concerned that some recent policy changes could undermine this objective.”

In March, APRA introduced supervisory measures to curb interest-only lending. At the time, HIA welcomed the measures, with chief economist Harley Dale describing them as a “cautious and sensible approach to the home lending environment nationally."

However, Mr Dale added that the housing market in Australia is not “homogenous,” and pointed to banks’ ability to apply APRA’s rules with a “considered and targeted approach” as a means of avoiding a negative impact on struggling markets.

Housing affordability measures were also announced in the 2017/18 federal budget, including options for first home buyers to make voluntary contributions of up to $30,000 to their superannuation accounts to go towards buying a house, while limits on foreign property investors were also introduced.

[Related: Brokers slam APRA’s ‘sledgehammer’ approach to IO loans]