The Western Australian government has been urged to ignore a recommendation from its economic regulator to sell the state’s lending business.
The Economic Regulation Authority has released a reform report that recommends privatising Keystart, the government-backed lender that helps low-income people buy housing.
Real Estate Institute of Western Australia president David Airey said Keystart has made an important contribution to the housing market since being founded in 1989.
“In particular, Keystart helps thousands of Western Australians get into their first home and out of the rental system,” he said.
“Its services are targeted at people on low and fixed incomes, and it plays a vital role in helping people with affordability and access to finance.”
Mr Airey said Keystart also helps rural business owners and farmers obtain finance for their dependants and employees.
“This is not a role suited to the private sector, and specialised lending to people with modest means should remain a government service to help with a stable housing market and with social equity,” he said.
Mr Airey said poorer people would need “strong, government-backed” lender when interest rates started rising again and conditions became less favourable.
[Related: Perth records annual capital growth of 5pc]