From Fairfax:
AB chief Andrew Thorburn said that while the weaker global economy and local regulatory caps on lending to property investors would see the rate of price growth slow, prices in Sydney and Melbourne would rise at high single digit rates due to strong demand and limited supply of housing close to the city centres.
…Westpac chief Brian Hartzer said conditions in the housing markets are “still pretty reasonable”.
“There continues to be good underlying demand for housing and in some markets, particularly NSW, a deficit of housing relative to that demand. So we think that should underpin things,” he told Fairfax Media after the bank announced a $3.5 billion capital raising on Wednesday and an increase in interest rates on home loans by 0.20 percentage points.
…”So all of those things together make us feel that there’s still a reasonable amount of support, and we don’t agree with the people at the extreme who say there’s a big bubble that’s about the burst.”
You can add the Wall Street Journal to the list of extremists:
It is always cheaper to buy an umbrella when the sun is shining.
So it is in Australia, where regulators aren’t waiting for a remarkable property-lending boom to go bust before they force the country’s megabanks to take precautions. The Australian Prudential Regulation Authority imposed higher capital requirements and more stringent risk weightings on property assets in July. In response, Australian banks have announced 17 billion Australian dollars ($12 billion) in fresh equity raising.
…The bigger challenge for Australia’s banks, Westpac included, will be to maintain such returns when property prices finally crack. Instead of slowing along with Australia’s China-driven, commodities-dependent economy, property has been resilient, extending a generational bull run. Prices in July were up nearly 10% from a year before.
