Home ownership for young harder than ever, says NAB boss Andrew Irvine

Andrew Irvine has called for better home planning laws to improve supply, lamenting the increasing difficulty of entering the housing market for younger Australians.

NAB Group CEO Andrew Irvine in Brisbane this week. Picture: Tertius Pickard

NAB chief executive Andrew Irvine says the home ownership dream has never been harder to achieve for young Australians as he called for better planning laws to relieve development bottlenecks across the country.

Mr Irvine told The Australian that while the great Australian dream of home ownership was not dead “it was harder today than it’s probably ever been”.

“If you look at the price of the average home to average income, that multiple today is much higher than it would have been for our parents or our grandparents,” said Mr Irvine after inspecting a $262m Lend Lease build-to-rent housing development NAB is financing in inner city Brisbane.

“When you don’t have enough dwellings being built, it creates price pressure.”

Mr Irvine took on NAB’s top job in April last year. Picture: Tertius Pickard

Mr Irvine said planning laws remained a problem in most of Australia with his developer customers taking up to three years to get planning approval for new projects. He said Queensland was a notable outlier with it taking less than six months to get the planning green light. “Queensland is probably best in class in the country and it doesn’t hurt that the Brisbane City Council has such a large jurisdiction,” he said. “In some other cities, there’s so many councils that you’ve got to work with and it’s much more challenging.”

He said high labour and building material costs also restricted the construction of new homes. “Building costs have probably increased 40 per cent to 50 per cent since 2019 and that is making it harder for developers to make projects stack up. The pipeline is coming up, but it’s still not enough that we need to house Australians as well as house new Australians.

“You look at last year, we’re probably getting half a million newcomers, which is adding to the pressure of lack of housing.”

Mr Irvine said that while there were some things that could be done to improve lending policies “it is a supply side problem, not a demand side problem”.

“If all we’re doing is mucking around on the edges on the demand side and don’t get more dwellings built, there’s no more homes for Australians to move into,” he said.

Mr Irvine said cost-of-living pressures had eased this year, helped by interest rates cuts, although some families were still doing it tough.

He said NAB expected the Reserve Bank to cut rates two more times this year and “maybe one at the turn of the year” by a quarter of a percentage point

“This will be really good for households as well as small businesses,” he said. “Households are under a little bit less pressure today than they would have been six, 12 or 18 months ago, which is a good thing. That doesn’t mean that that’s uniform. There are still pockets of pressure where families are still doing it tough. And we’re looking after those customers and talking to them regularly.”

He said there also were bright spots in the general economy, with GDP growth of more than 2 per cent expected this year.

“Employment is still really strong and unemployment levels are low,” he said “With the tax cuts, as well as the interest rate reductions, I think that’s going to put a bit more money in people’s pockets. And that’s very welcome.”

Mr Irvine, who took the top job at NAB in April last year after serving in senior executive roles in Canada, said Australian banks were in good shape.

“There are probably a few more rules and regulations around access to credit in Australia that I haven’t seen in other markets in regards to responsible lending,” he said.

“But at the end of the day, Australian banks are in good shape, NAB is in good shape, and we’re open for business. And we’re seeing really strong lending growth, both on our household side and in the business bank.”

Originally published as Home ownership for young harder than ever, says NAB boss Andrew Irvine