Property Market Information: Fresh warnings from the RBA

By the resi financial blog team, 23 October 2014

Property Market Information: Fresh warnings from the RBA

The Reserve Bank of Australia (RBA) and the Australian Prudential Regulation Authority (APRA) have both fired shots across the bow, warning investors and lenders alike that risk-management restrictions could be possible.

Deputy Governor of the RBA, Philip Lowe, said in a recent investors conference in Sydney that the bank's feeling was that the market had become "somewhat unbalanced" in certain sectors.

In a positive note, Dr Lowe did also refer to the fact rising demand for existing stock, which has increasingly involved Self Managed Super Funds (SMSF), has spurred on a definite upswing in new housing development. 

"The good news is that this increased demand for existing housing assets is translating into increased demand for new housing construction. This is a very welcome development. Investment in residential construction has increased by 9 per cent over the past year and further increases are expected," Dr Lowe noted. 

SMSFs have become an increasingly popular way of providing for retirement by investing in property and other assets. Data released in July by the Australian Taxation Office shows the increase of these funds across the country. The number of self managed funds has risen by almost 135,000 in the past five years, and the number of SMSF members has jumped by over a quarter million in the same period.

In the October 22 opening statement to the Senate Standing Committee on Economics, APRA Chairman Wayne Byres warned that the Australian could be in need of stabilising monetary policy. He did, however, state that "so-called macroprudential measures" were not at the top of the toolbox for the regulatory body, and that there many other options to consider first.

Mr Byres said that APRA had not reached a conclusion on which direction to take and would undertake further deliberation and testing of the financial system, before declaring what, if any, move is to be made.

If a SMSF is a superannuation investment option that sounds interesting to you, make sure to give your local resi loan specialist a call to secure some sound mortgage advice.

Categories: Property Investment