Australian Prudential Regulation Authority Chairman Wayne Byres addressed recent speculation that the regulator would soon have to intervene as it did in 2015 and 2017 to avoid a housing bubble.
“Let me remind you that we have no mandate to target the level of housing prices, or act to improve housing affordability,” Byres said in planned remarks for the Australian Financial Review Banking Summit.
“For us, housing prices are a risk factor, not a goal.”
Home prices in Australia surged by the most since August 2003 in February as record low borrowing rates and government incentives lured more buyers into the market, raising fears of overheating.
Byres said the data did not show major signs of “higher risk lending” despite new mortgage loans recently climbing to record highs an the leverage of those loans also increasing.
“It is a nuanced picture. There does not seem cause for immediate alarm,” he said. “Nor, though, for complacency. We are obviously watching risk-taking by the banking sector closely.”
The stellar recovery in the housing market followed a COVID-19-led crunch early last year and provides a much-needed windfall to consumer wealth and confidence, with the country’s housing stock already valued at A$7.2 trillion ($5.50 trillion) by September.
Should risks, such as looser lending standards or relaxed portfolio limits, materialise, the banking regulator could intervene in the form of curbs on investor or interest-only lending or applying so-called countercyclical capital buffers, he added.
In New Zealand, the government last week introduced a raft of measures to cool its red-hot housing market, including new taxes for investors, after housing affordability fell to its lowest ever.