May’s unexpectedly strong surge in house prices won’t last, as both a regulatory willingness to tighten the screws on lending and the onset of new supply will cool price growth, economists say.
“We don’t think this pace of growth is likely to continue through the year,” Mr Bloxham said. “We’ve seen surprisingly strong house price numbers for May and it’s being led by Sydney and Melbourne. This is going to be a worry for authorities.
“The Reserve Bank of Australia would have liked to see the housing market continue to cool and you’re seeing re-acceleration of house prices in the two [cities] where they were most worried.
From the AFR:
Still, the new supply of apartments to hit this year and next with record numbers of new apartments settling, along with the regulator’s willingness to tighten lending conditions, would bring conditions back down to earth, Mr Bloxham said.
“I think you’re going to see that dial continually get used and may still get tighter if the current trend of exuberance we’ve seen were to persist,” he said.
I agree though worry they’ll take too long. APRA should already be tightening further on the RBA rate cut even if the CoreLogic numbers are not to be fully believed. One has to suspect a fair degree of numberwang given how fast mortgage issuance is falling and Chinese bidders are disappearing.
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APRA will say they’re not aiming for any given price growth level but anything above income growth is by definition inflating the bubble. That offers plenty of scope to tighten further.
