Claims of property collapse in six weeks 'silly' say banks
BANKS have ridiculed a report which claims Australia has ‘six weeks’ to prevent a property market collapse caused by their crackdown on foreign investor lending.
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THE big banks have ridiculed a report which claims Australia has 'six weeks' to prevent a property market collapse caused by the banks' crackdown on foreign investor lending.
The article "Australia Risks Strategic Setback From a Significant Foreign Direct Investment Drop Due to Changes in Bank Policies" is from the Washington-based International Strategic Studies Association.
News.com.au reported that it argues "changes in local banking policies" could see foreign direct investment in the property sector "decline markedly". "This will profoundly impact the Australian government's ability to fund major programs in the defence and civil sectors," it said.
ISSA president, West Australian-born Gregory Copley AM, told news.com.au the "banks' caution is precipitating the market collapse".
"We estimate that Australia has about six weeks or so to turn this situation around, otherwise there would be a massive hit on property valuations and the building trades," he said.
NAB chief economist Alan Oster told news.com.au the ISSA's prediction of an imminent collapse as "garbage", adding that the CLSA report was "very poor analysis".
"What the banks were trying to do with the tightening of apartment lending, particularly to foreigners, was make sure that if people were having trouble offshore they didn't end up in the Australian banking system."
According to NAB's surveys of property developers, foreign buyers make up around 20 per cent of off-the-plan purchases, but that figure is "significantly higher" in Sydney and Melbourne CBDs.
Mr Oster said the issue of settlement risk was "probably further down the track" in 2017-18. "The idea that the banks, who might own 20 to 30 per cent max of these apartments, will somehow crash the market is silly," he said.
Originally published as Claims of property collapse in six weeks 'silly' say banks
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