The Reserve Bank has warned “this year is crunch time” for the Brisbane property market, where the central bank is “most concerned” about a potential housing crash.
Speaking at an Australian Business Economists lunch in Sydney yesterday, RBA assistant governor Luci Ellis also warned that global interest rates would continue to rise, which could have implications for Australia’s official cash rate.
…Australian financial regulators have unleashed several policies aimed at curbing the country’s mortgage debt binge and pace of house price growth, while attempting to ensure lenders are properly assessing borrowers who may find themselves unable to pay back loans when interest rates rise from record-low levels. Mortgages in arrears around the nation hit a five-year high, according to a Moody’s report this week.
Financial markets are pricing in two rate hikes by the RBA over the next 12 months.
Ms Ellis said the central bank was worried about oversupply of new apartments in Brisbane.
Unlike Sydney, where construction is spread across the metropolitan region, and Melbourne, where strong population growth is supporting house prices, Brisbane’s apartment developments have been concentrated in a single area.
“Where we’ve been most concerned is Brisbane,” Ms Ellis said. “A lot of that new supply is coming on this year, so this year is crunch time.”
China’s restrictions on capital flowing out of the country, the local banking crackdown limiting finance for investors and sluggish domestic wages growth has combined with prudential policies and caused a perfect storm for the apartment market….