APRA looks to have saved Australia from a housing crash in 2018: Alan Kohler

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Commentator Alan Kohler says property doesn’t look like it will crash and the feared bubble is yesterday’s scare story after the interventions of APRA’s Wayne Byres between 2014 and 2017.

But the Australian newspaper columnist still says there is still time for a crash, "but so far so good, and at this stage it doesn’t look like happening."

He suggests all the bubble talk is about bitcoins and cryptocurrencies so the housing bubble is yesterday’s scare story.
"The Australian housing bubble, so derided around the world and feared here, is having a soft landing," he wrote.

Kohler says Byers, the chairman of the Australian Prudential Regulation Authority can take much of the credit for "gently taking the air out of what was looking a pretty stretched balloon."

He started just a few months after taking over as chairman of APRA, with letters to the banks in December 2014 effectively firing a shot across the bows. 

The press release at the time advised it was watching especially property investor lending above 10 per cent growth and increases in high loan-to-value ratio (LVR) loans.

Its other significant intervention in more recent times was on onterest-only lending which was restricted to 30 per cent of new loans, and only if LVRs were above 80 per cent, growth in investor lending had to be below 10 per cent.

Kohler says APRA was forced into this because the RBA felt unable to raise interest rates to lean into the housing boom.

"It must be acknowledged that APRA’s interventions over the past two years were exquisitely timed and directed — in effect APRA produced a much more targeted monetary policy than the RBA ever could."

"Whereas RBA rate moves affect everyone and all rates, APRA was able to specifically increase interest rates for investor and higher risk loans only, and leave owner-occupier mortgage rates where they were, simply by leaning on the banks to restrict investor lending."

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Published in Property Observer 18th December 2017