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
Peak season powers a nationwide workforce rebound
Australia’s labour market is experiencing a significant resurgence as peak season spending revitalises employment across the nation. The latest November Jobs Report from Employment Hero, a global ...Read more
Earn
From lone wolves to performance systems: how to convert individual drive into repeatable team wins
High-performing individuals are valuable; systems that meaningful scale their behaviours are priceless. Agency leaders say networks can transform ambition into organisational advantage—if the ...Read more
Earn
State Street economist comments on recent Labour Force data, urging RBA caution
In light of the recently released Labour Force data, Krishna Bhimavarapu, an economist at State Street Global Advisors, has provided insights that may influence the Reserve Bank of Australia's (RBA) ...Read more
Earn
Job market booms, but falling hours keep productivity under pressure
Australia's job market is experiencing a significant resurgence, with employment figures showing a robust increase, according to the latest report from Employment Hero. The October Jobs Report, ...Read more
Earn
Rate cut back in play: how a softer labour market could reshape Australian balance sheets by Christmas
With unemployment at a four‑year high and policy makers signalling a controlled easing in labour conditions, markets are again pricing the possibility of an RBA cut before year‑end. Beyond the ...Read more
Earn
New Business Boom: Australia’s Top Ten Suburbs Lead Entrepreneurial Growth
Australia's entrepreneurial landscape is witnessing a remarkable transformation, with the latest data from the Lawpath New Business Index highlighting a significant surge in new business registrations ...Read more
Earn
Unlocking success: How tiny habits can make or break your career trajectory
Career plateaus rarely begin with a market shock; they start with tiny, repeated choices—avoiding change, outsourcing the hard calls, neglecting pipeline hygiene. In a market where distribution, data ...Read more
Earn
Unlock your potential by transforming hidden habits into success
Self-sabotage isn’t a character flaw — it’s an operating model failure. As pressure, complexity and AI-driven change intensify, the cost of avoidable behaviours (avoidance, over-delegation, context ...Read more
Earn
Peak season powers a nationwide workforce rebound
Australia’s labour market is experiencing a significant resurgence as peak season spending revitalises employment across the nation. The latest November Jobs Report from Employment Hero, a global ...Read more
Earn
From lone wolves to performance systems: how to convert individual drive into repeatable team wins
High-performing individuals are valuable; systems that meaningful scale their behaviours are priceless. Agency leaders say networks can transform ambition into organisational advantage—if the ...Read more
Earn
State Street economist comments on recent Labour Force data, urging RBA caution
In light of the recently released Labour Force data, Krishna Bhimavarapu, an economist at State Street Global Advisors, has provided insights that may influence the Reserve Bank of Australia's (RBA) ...Read more
Earn
Job market booms, but falling hours keep productivity under pressure
Australia's job market is experiencing a significant resurgence, with employment figures showing a robust increase, according to the latest report from Employment Hero. The October Jobs Report, ...Read more
Earn
Rate cut back in play: how a softer labour market could reshape Australian balance sheets by Christmas
With unemployment at a four‑year high and policy makers signalling a controlled easing in labour conditions, markets are again pricing the possibility of an RBA cut before year‑end. Beyond the ...Read more
Earn
New Business Boom: Australia’s Top Ten Suburbs Lead Entrepreneurial Growth
Australia's entrepreneurial landscape is witnessing a remarkable transformation, with the latest data from the Lawpath New Business Index highlighting a significant surge in new business registrations ...Read more
Earn
Unlocking success: How tiny habits can make or break your career trajectory
Career plateaus rarely begin with a market shock; they start with tiny, repeated choices—avoiding change, outsourcing the hard calls, neglecting pipeline hygiene. In a market where distribution, data ...Read more
Earn
Unlock your potential by transforming hidden habits into success
Self-sabotage isn’t a character flaw — it’s an operating model failure. As pressure, complexity and AI-driven change intensify, the cost of avoidable behaviours (avoidance, over-delegation, context ...Read more
