ROOT
Macro-prudential action likely this year, ANZ predicts
ANZ researchers have suggested that those looking for an indicator of whether the financial regulators will act on housing prices are looking in the wrong places.
Macro-prudential action likely this year, ANZ predicts
ANZ researchers have suggested that those looking for an indicator of whether the financial regulators will act on housing prices are looking in the wrong places.
Economists at ANZ expect that the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of Australia (RBA) will move to cool the housing market well ahead of 2022.
“With credit growth set to accelerate over the coming months, ANZ Research expects APRA will announce hard macro-prudential controls by the end of the year,” they predicted.
Their forecasts now assume that price growth in Australia’s housing market will slow as ‘hard’ macro-prudential policy is implemented before the end of 2021.
In its most recent rate call, the RBA said that it would not increase the cash rate until actual inflation is sustainably between 2 and 3 per cent.
“For this to occur, the labour market will need to be tight enough to generate wages growth that is materially higher than it is currently. This is unlikely to be until 2024 at the earliest,” the RBA said in a statement.
However, ANZ economists Felicity Emmett and Adelaide Timbrell insist that while neither the RBA or APRA explicitly target house prices, both have clear responsibilities when it comes to lending standards and trends around household debt.
ANZ’s research team argued that these factors represent key components of the strategic objectives for both bodies, and that current trends are “likely to be concerning for the regulators”.
According to Ms Emmett and Ms Timbrell, a 30 per cent rise in investor lending over the last three months is indicative of a speculative element in the market, and the share of high debt-to-income ratio loans in Australia’s financial system has quickly crept upwards in recent quarters.
Going forward, they said that “ANZ Research’s expectation is credit growth will lift above 7 per cent by the end of 2021 and will grow above household income by a significant margin for the next few years”.
As a result, Ms Emmett and Ms Timbrell claimed that APRA has begun moving towards macro-prudential action via “a soft touch approach”.
Citing a recent quarterly statement from a meeting of Australia’s Council of Financial Regulators, they noted that APRA has reached out to larger authorised deposit-taking institutions (ADIs) in order “to seek assurances that they are proactively managing risks within their housing loan portfolios, and will maintain a strong focus on lending standards and lenders’ risk appetites”.
Ms Emmett and Ms Timbrell expect that multiple measures will be introduced, though the choices made by regulators may depend “on how the data evolves over the next couple of months”.
“Fine-tuning a gentle slowdown in the housing market will be a challenge. The regulators will want to avoid triggering a sharp turnaround in house prices, so ANZ Research expects they will go lightly in the first instance,” they said.
RELATED ARTICLES
About the author
About the author
Earn
Australian employment data shows mixed signals as full-time jobs rise despite overall decline
Australia's employment landscape presented mixed signals in May, with overall employment declining despite a strong rise in full-time positions, according to analysis of the latest Labour Force dataRead more
Earn
Millennials face 'generational squeeze' as most vulnerable group in retirement
Millennials will be the most vulnerable demographic to face the "generational squeeze" in retirement, caught between supporting elderly parents and adult children while funding their own later years, ...Read more
Earn
Top workplaces for women in 2025 highlight progress in gender equity and inclusive leadership
Australia’s top workplaces for women in 2025 have been announced, recognising companies that are leading the way in gender equity, flexible work arrangements and inclusive leadership development. Read more
Earn
Employee satisfaction dips as Australian workplaces tackle retention challenges
Australian workplace satisfaction has declined to 78 per cent as companies grapple with economic pressures and changing work dynamics, according to a new report. Read more
Earn
Simplify your finances: The benefits of debt consolidation loans in Australia
In an era where managing multiple debts has become a common financial challenge for many Australians, debt consolidation loans emerge as a practical solution to streamline finances and regain controlRead more
Earn
Long-term welfare dependency declines despite rise in JobSeeker recipients
New research from e61 Institute has revealed that, contrary to popular belief, the number of people reliant on the benefit system in Australia has declined over the past two decades, despite an ...Read more
Earn
Best property investment strategies in Australia for 2024: An expert's perspective
As the Australian property market continues to evolve, investors are keenly looking for strategies that will yield the best returns in 2024. Read more
Earn
Innovative tax saving techniques for individuals and families
Tax time can be daunting for many Australians, but with some innovative planning and smart strategies, individuals and families can maximise their tax savings. Read more
Earn
Australian employment data shows mixed signals as full-time jobs rise despite overall decline
Australia's employment landscape presented mixed signals in May, with overall employment declining despite a strong rise in full-time positions, according to analysis of the latest Labour Force dataRead more
Earn
Millennials face 'generational squeeze' as most vulnerable group in retirement
Millennials will be the most vulnerable demographic to face the "generational squeeze" in retirement, caught between supporting elderly parents and adult children while funding their own later years, ...Read more
Earn
Top workplaces for women in 2025 highlight progress in gender equity and inclusive leadership
Australia’s top workplaces for women in 2025 have been announced, recognising companies that are leading the way in gender equity, flexible work arrangements and inclusive leadership development. Read more
Earn
Employee satisfaction dips as Australian workplaces tackle retention challenges
Australian workplace satisfaction has declined to 78 per cent as companies grapple with economic pressures and changing work dynamics, according to a new report. Read more
Earn
Simplify your finances: The benefits of debt consolidation loans in Australia
In an era where managing multiple debts has become a common financial challenge for many Australians, debt consolidation loans emerge as a practical solution to streamline finances and regain controlRead more
Earn
Long-term welfare dependency declines despite rise in JobSeeker recipients
New research from e61 Institute has revealed that, contrary to popular belief, the number of people reliant on the benefit system in Australia has declined over the past two decades, despite an ...Read more
Earn
Best property investment strategies in Australia for 2024: An expert's perspective
As the Australian property market continues to evolve, investors are keenly looking for strategies that will yield the best returns in 2024. Read more
Earn
Innovative tax saving techniques for individuals and families
Tax time can be daunting for many Australians, but with some innovative planning and smart strategies, individuals and families can maximise their tax savings. Read more
