The OECD says RBA must raise interest rates early…Real estate agents welcome report on foreign investment… Bank of Queensland approvals escalate

Real estate agents welcome report on foreign investment
It continues to be one of the hottest and most divisive issues in the property world; foreign investment and its effect on house prices.  Real estate agents have welcomed the release of a new report into foreign investment in Australian residential real estate. The report by the House of Representatives Standing Committee on Economics has delivered on key recommendations of the Real Estate Institute of Australia including the establishment of a national database for property purchases, an alert system with the Department of Immigration, capital gains benefits forfeited to Government for breaches along with increased and a beefed up Foreign Investment Review Board with a greater focus on audit and compliance. REIA CEO Amanda Lynch said: “We now ask the Government to implement the report recommendations as a matter of priority.” The recommendations have also been broadly welcomed by the Residential Development Council. Its executive director Nick Proud says it will enable a better understanding of the role of foreign investment and added: “We welcome foreign investment in residential real estate as it provides up to 35 per cent of a new development and with the domestic pre-commitment residential projects are able to progress much faster adding to residential supply, to aid record levels of housing starts in 2014.”

Bank of Queensland approvals escalate
The Bank of Queensland’s ad campaign and the efforts of mortgage brokers has seen the bank’s approvals of home loans soar by 20 per cent from September to October. The bank has only started using brokers in the last year and approvals from that channel have risen from 3 per cent a year ago to 20 per cent now. Speaking at the bank’s annual general meeting acting CEO Jon Sutton praised brokers for their work and said that he expected the mortgage business to grow further in the coming months.

International body says RBA must raise interest rates early
The Organisation for Economic Cooperation and Development says the Reserve Bank of Australia should increase interest rates early next year or face higher house prices that could “unwind sharply.” The advice came with support for the RBA’s consideration of borrowing restrictions, noting that the high level of property owned by investors could pose a risk. If the central bank follows the OECD advice the interest rate would rise from its current 2.5 per cent in the first six months of 2015. The forecast for now is that rates would not rise until the second half of the year.