Developers warn of economic hit from property crack down

The prospect of a regulatory tightening to rein in house prices has prompted a fierce backlash from developers who say the recovery is still fragile.

Harry Triguboff in his office at Meriton. Picture: John Appleyard

Imposing tough measures to cool the runaway housing market will hurt fragile economic growth at a time when the building sector is playing a key role in the recovery, developers and real estate agencies have warned.

Meriton founder Harry Triguboff pointed to the lack of immigration as the main problem, and apartment company Crown Group rejected the notion that the market was overheating.

The peak co-ordinating body for the nation’s financial regulators has “discussed possible macroprudential policy responses” to tame what it sees as the runaway property market and increasing household debt, but agencies cautioned that any move could slug first-home buyers.

Mr Triguboff said the problem for him was not home loans, it was more the lack of overseas buyers.

“We have problems, we have no people here. If we didn’t have Chinese and Indians our population would be dropping,” Mr Triguboff told The Australian.

“To sell housing we need people here, this is the problem, tell (Treasurer Josh) Frydenberg, we need people here.”

Listed giants Stockland and Mirvac also warned against turning to regulation in order to control house price growth at a time when the pace is already cooling down, and see blocks to supply as the main problem.

Mirvac chief executive Susan Lloyd-Hurwitz said the most critical driver of housing affordability remained housing supply, “which continues to be an issue in most of our major cities”.

“The ongoing delivery of a ­diverse range of housing in the inner, middle and outer suburbs in proximity to social and physical infrastructure provides more opportunities for home buyers, creates jobs and drives economic activity,” Ms Lloyd-Hurwitz said.

“Any regulatory measures should be carefully considered to not adversely impact new housing supply, which is critical for the growth of our cities, supporting the reactivation of migration and our economic recovery.”

Residential developer Stockland emphasised the importance of buyers being able to borrow.

“Any changes to lending requirements need to be highly targeted and should continue to support first-home buyers into the market,” the company said.

It also said supply issues should be addressed: “Macroprudential measures are important, but housing supply remains a ­significant lever impacting the availability and affordability of housing. New housing stock is more affordable for first-home buyers and drives economic growth for our nation.”

Residential property could come under stress. Picture: NCA NewsWire/Joel Carrett

McGrath Estate Agents chief executive Eddie Law warned of the consequences of regulatory intervention in the market that could fall on workers seeking housing.

“The concept of macroprudential intervention to limit house price growth in a time where the global economy, including Australia, has been the recipient of significant liquidity stimulus, I would argue is a blunt tool that would most likely prove ineffective,” Mr Law said.

He said the macroprudential influence was most likely to be administered to the authorised deposit-taking institution banking market via the Australian Prudential Regulation Authority, as the approved regulator.

“However, APRA has no governance over non-bank lenders, which make up approximately 10-15 per cent of the overall mortgage market that has a value of $2.2 trillion,” he said.

Although governed by the Australian Securities & Investments Commission, their primary responsibility was as “responsible” lenders, which he said gave them broad licence to “continue to lend to a level that would be construed as stimulatory”.

New Zealand has already tried an initial bout of macroprudential intervention, which failed to stop growth in asset prices, which Mr Law said was primarily driven by the “perfect storm” caused by the confluence of cheap money coupled with a shortage of supply.

McGrath chief executive Eddie Law

Mr Law warned any intervention that limited loan-to-value ratios, or saw the raising of bank loan servicing reference rates, would “only seek to limit the capacity of those most in need of assistance, namely blue collar workers in the outer suburbs”.

Crown Group chief executive Iwan Sunito, whose private group is developing along the eastern seaboard, disputes claims the entire market is overheating. “The hotel industry is struggling, prices are dropping reflecting the lack of tourists,” said Mr Sunito, adding that new policies restricting the largest inbound tourist market, China, were not helping.

“The retail property market has been affected badly out of Covid, and the urban apartment development market is still really soft. The uncertainty about when they can open up Australia to Indonesia and China is not helping.”