Property bust our big threat, warns Wesfarmers chief Richard Goyder

OUTGOING Wesfarmers chief Richard Goyder says taking the heat out of red-hot property markets in Melbourne and Sydney looms as the nation’s key economic challenge.

Richard Goyder says our housing market needs to be carefully managed.

OUTGOING Wesfarmers chief Richard Goyder says taking the heat out of red-hot property markets in Melbourne and Sydney looms as the nation’s key economic challenge.

Assessing the state of the economy ahead of standing down as the chief of the nation’s biggest employer, Mr Goyder said a sharp downturn in the property market posed the biggest risk.

But it was a risk he was confident regulators were on top of, he said.

“Our housing market needs to be carefully managed and I think it is, between the Reserve Bank and the banks,” Mr Goyder said.

“Just moderating what has happened with housing prices, particularly in Sydney and Melbourne, we certainly don’t want a bubble bursting there.

“The thing to avoid is a house price bubble and I think all our policymakers are working hard to ensure that won’t happen and I’d be pretty confident that won’t happen as well.”

Mr Goyder, who took over as AFL chairman in April, spoke to Business Daily after Wesfarmers last month delivered a 22 per cent rise in full-year profit to $2.87 billion.

Numbers released yesterday by property analysts CoreLogic show the property market is cooling, with Melbourne house price growth slowing to 0.5 per cent in ­August and Sydney prices flat.

Prices have risen by about 13 per cent in both capitals over the past year.

The latest monthly figures will be welcome news to the Reserve Bank and the banking regulator, the Australian Prudential Regulation Authority, which have both taken action to tighten lending to the housing sector.

My Goyder will hand over the leadership reins of the retail, mining and industrials conglomerate to the group’s former industrials head, Rob Scott, at the Wesfarmers annual meeting in November.

He said the level of transparency and number of stakeholders a public company needed to engage with had been the biggest change to the role of a chief executive during his 12 years leading Wesfarmers. He said maintaining focus on the long term in an increasingly noisy and fast-paced environment took real discipline.

“Increasingly, whether it’s because of our superannuation funds, the 24-hour media cycle, the rise of social media, there is so much happening instantaneously that affording yourself the time to step back and look at things holistically, look at things over the medium to long term is incredibly ­important,” My Goyder said.

Under Mr Goyder’s reign Wesfarmers bought and transformed Coles into the nation’s best-performing supermarket chain and engineered Bunnings into the undisputed hardware heavyweight.

But he steps down at a time when profit at Coles is coming under pressure and investor nerves are being tested over its push to take Bunnings into Britain.

Mr Goyder said he understood the concern about the UK push but pointed out investors had also questioned its acquisition of Coles and Kmart, which are now key cash generators.

“There was a fair bit of scepticism around Coles at the time and indeed in some of the other businesses, Kmart in particular,” he said.

“You have just got to work through these things. We have got really good people in Bunnings UK and step by step we are getting it where we need to get it to but there is a short-term cost.

“Financially we are in good shape — the balance sheet is as strong as it has been for a long time.”

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