Despite recent remarks by the Housing Industry Association that Sydney does not require similar restrictions loan standards as New Zealand, an expert on investment strategy has begged to differ.
Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. said Australian regulators need to impose stricter loan standards similar to those in New Zealand to be able to cool Sydney’s strong housing market.
“New Zealand’s approach has been lot more direct and tougher, whereas here it’s about having a chat with the banks and expecting changes,” Oliver was quoted as saying by Bloomberg
The National Australia Bank is also seeking means to trim the growth of investor loans to halt the home-buying frenzy.
The comments come after the Australian Prudential Regulation Authority (APRA) asked lenders in December to limit investor mortgages to 10% a year as those breaching that level will most likely see higher capital ratios.
Oliver also said that Australian regulators should require lenders to cut discount rates and raise down payments for investment properties, apart from being required to hold more capital as well.
He argued that “these tools should target Sydney because house prices haven’t surged in some cities and lower rates are needed for other parts of the economy”.
“If APRA is right, it should mean house price gains in Sydney should start to moderate but the question is have they done enough?” Oliver said. “There is a lot riding on APRA now.”
Starting this month, New Zealand will require investors to provide a 30% down payment to get a mortgage on Auckland property. The country also said it will be more rigorous in enforcing taxation of capital gains on investment properties. New Zealand aims to ensure that non-residents are included in the tax net.
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