Banks need to open purses to help turn the property market around, says Triguboff

The billionaire says the tight lending restrictions is a bigger issue facing the property market than the cutting or hiking of the official interest rate.

Billionaire apartment mogul Harry Triguboff says the housing market will continue to slide and Australia will be engulfed with foreign investments unless local banks don’t loosen the straps on lending restrictions.

The Meriton managing director said interest rate dialogue has dominated property market commentary but it is less significant than the banks’ plans with home loan applications.

“We are all talking about the Reserve Bank lowering interest rates, but that is only a minor matter,” Mr Triguboff told The Australian.

“The banks must lend, they do not because they are afraid.”

Mr Triguboff with then Federal Treasurer Scott Morrison at the opening of a Meriton development last year.

He said the banking royal commission served its purpose in highlighting the wrongs of the industry but the lenders must now return to the aid of potential home buyers.

“Now that we have shown where they were wrong, we must encourage them to lend, and use discretion,” Mr Triguboff said.

“If they (house prices) drop, the economy suffers.”

CoreLogic data for January showed Sydney and Melbourne prices were now 12.3 per cent and 8.7 per cent down from their respective peaks in July and November 2017, with Melbourne falling at “the fastest rate ever seen”.

“I don’t want us also to depend on high-priced foreign lenders to provide the finance instead of our banks,” he said.

Westpac became the first of the big four banks on Thursday to predict the Reserve Bank would cut rates twice this year.

The lender’s chief economist Bill Evans cited the weakening local economy in forecasting the cash rate to be cut 25 basis points in August and then again in November, cutting the official cash rate to 1.0 per cent.

RBA boss Philip Lowe changed his tune on the state of the Australian economy earlier this month, admitting its weakness had led him to hold a neutral view on the rates’ potential movements.

Mr Triguboff owns more than 9000 apartments of which 4000 are rental units, as reported by The Australian, and he said investors owning apartment blocks would stall until the property market improved.

“Build to rent will not come as long as prices are soft,” he said. “As soon as prices recover, build to rent will take place.”

Mr Triguboff has sold frequently to Chinese investors but said local buyers and financing is a more consistent option for the Australian market.

“Foreigners must only be an additional bonus,” he said.

According to Daniel Walsh of investment buyer’s agency Your Property Your Wealth, the banks’ continued grasp on the purse strings and reluctance to finance loans defies logic.

“There is something seriously wrong with the system when borrowers with above average household incomes can’t borrow funds to buy a reasonably priced home or investment property,” he said.

Westpac chief economist Mr Evans wrote in his report that the bank had cut its GDP growth forecast for both this year and next from 2.6 per cent 2.2 per cent.

“With the slower growth profile we now expect to see the unemployment rate lift to 5.5 per cent by late 2019,” Mr Evans wrote.

“That makes a strong case for official rate cuts to cushion the downturn and, in turn, meet the RBA’s medium term objectives.”

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Originally published as Banks need to open purses to help turn the property market around, says Triguboff