NAB boss says housing market needs a push and economy must slow to control inflation

Ross McEwan says the next four to six weeks will give him a sense of how effective the last bout of interest rate rises has been in controlling consumer spending.

Australia’s economy must slow to control inflation at the same time as governments need to stimulate the housing market with faster approvals and more sites, National Australia Bank boss Ross McEwan has warned.

Speaking on a podcast produced by NAB, Mr McEwan said he was closely watching the trading over the coming four to six weeks to get a sense of how effective the last bout of interest rate rises had been in controlling consumer spending.

Mr McEwan, who runs Australia’s largest business lender, said there was a sense among companies that the economy was slowing.

“I think we’re getting the impact of interest rates rising and with the move two weeks ago, I think we’re probably getting close to the top of the cycle and done enough, but February will tell,” he said.

Mr McEwan said he suspected retail would slow, but the “very strong” migration, topping more than 500,000 new arrivals to Australia, would go to supporting demand.

“They all want food. They were always going to be using transport or buying a motor vehicle, so that’s, I think, kept the economy going as we expected it would,” he said. “But the underlying trends are pretty sluggish.”

Mr McEwan said he was still optimistic about the Australian economy. “We talked about growth next year being, you know, under 2 per cent – probably around 1.5 to 1.7 per cent – that’s not bad, when we are slowing the economy down,” he said.

But Mr McEwan said more work was needed to address Australia’s high house prices, which were causing homelessness and stress in the community. The NAB chief executive said Australia was not building enough houses for at least a decade.

“We need a greater number of houses to be built than what’s being built today, so it is supply and demand,” he said. “I know it’s a global problem, but we do need to get on and develop more housing and faster.”

Mr McEwan said state governments needed to make more sites available to build on, with faster approvals. “I think as we get into 2024, we need to make it easier for our developers just to get on and do what they’re great at, which is to develop property sites and build houses or apartment buildings, which is desperately needed here in Australia,” he said. But Mr McEwan said the solution to the nation’s housing crisis was not just building more, but building up and particularly around transport and job hubs.

“And we do unfortunately have to go up, which a lot of people are objecting to very heavily,” he noted.

Mr McEwan said there were plenty of prime sites, pointing to Sydney’s Parramatta Rd corridor, noting buildings could rise to six or eight levels but noting that such projects “seem to be a struggle”.

He said building more in ­established areas would mean “we didn’t have to keep looking after that infrastructure … otherwise we’ve got government spending more and more on transportation facilities”.