The International Monetary Fund (IMF) has concluded its 2016 Article IV Consultation with Australia, issuing the following warning about Australia’s housing and debt risks:
By some metrics, housing market conditions have cooled, in tandem with intensified prudential and regulatory steps, but risks related to house price and debt levels remain. In the continued low interest rate environment, house prices and household debt have risen further but house price growth has moderated. Intrinsic housing market risks are localized. Bank lending to household has slowed, especially in riskier loans, and banks have strengthened their balance sheets…
Has the IMF not seen the latest house price data? Price growth is clearly re-accelerating:
The IMF also warns against lifting interest rates:
Directors noted that continued demand support is needed to ensure a smooth transition to non-mining growth. They agreed that, with inflation below target, still elevated underemployment, and remaining economic slack, the monetary policy stance should remain accommodative. Directors welcomed the authorities’ readiness to ease monetary policy further if warranted, and encouraged steps to improve policy communication.
Before including the following howler:
Directors commended the progress in enhancing prudential and regulatory measures to mitigate risks associated with the housing market, and in improving AML/CFT safeguards in the real estate sector.
I’m not sure what planet the IMF are on. APRA’s 10% speed limit on investor lending is hardly robust, hence the recent resurgence in specufestor activity from already turbo-charged levels.
Moreover, the federal government has tacitly supported money laundering into real estate by deferring indefinitely the promised second tranche implementation of AML rules for real estate gate-keepers, which have been in limbo since the federal government first promised to bring them into the regulatory net in 2003. This deferral came despite explicit criticism from the global regulator, the Paris-based Financial Action Taskforce, that Australian homes are a haven for laundered funds, particularly from China, as well as similar warnings from Austrac.
