An executive from National Australia Bank (NAB) claims rising home values in cities such as Sydney are unlikely to be affected by the banking regulator’s moves to cut mortgage lending to investors.
Sydney, in particular, is struggling with undersupply despite strong demand from foreign investors, said Gavin Slater, the lender’s head of personal banking. NAB said house prices in the city jumped 40% in the past three years alone.
 “All lenders are responding to the macro-prudential guidelines,” Slater said at a business lunch in the city. “I don’t believe it will have an impact on house prices.”
The increasing prices in Sydney’s housing market have long triggered worries of a housing bubble, particularly by Treasury Secretary John Fraser.
Bloomberg said in its report that the Australian Prudential Regulation Authority last year told lenders to put a cap on the expansion of mortgages to residential property investors to just 10% a year.
Last week, Reserve Bank of Australia governor Glenn Stevens dubbed some elements of the Sydney housing market as “crazy”, while Pacific Investment Management Co. has called for stricter home loan restrictions to avoid risking financial stability.