Requiring banks to be more sensitive to Sydney and Melbourne’s property markets could make the Australian Prudential Regulation Authority more able to safeguard the country’s housing sector, an independent senator has argued.
Nick Xenophon also warned that future moves of the Reserve Bank of Australia to increase cash rates to cool markets may turn up as a “wet blanket that suffocates the rest of the country” along with the big capital cities, The Australian
“It’s important that our regulators understand that the Sydney and Melbourne housing markets don’t represent the entire country, that if you tighten up on Sydney and Melbourne you could end up causing a disastrous effect on housing markets in the rest of the country,’’ he said.
He added that following New Zealand’s regulator in tightening loan conditions for buyers such as cutting LVR for banks would be “too much of a blunt instrument that could cause a collapse in more fragile housing markets such as Adelaide, Brisbane and Hobart’’.
Xenophon assured he would propose an inquiry this year to examine investor and foreign-buyer activity in both cities and its impact on first-home and owner-buyer activity.
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