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Housing: boom or doom? ANZ

Posted on Aug 2, 2017

Housing: boom or doom? ANZ

Australians love talking about property – how expensive it is but also how desirable. At the same time as affordability is at cyclical lows and household debt at highs, both major Australian media organisations have launched huge, glossy inserted marketing magazines wallowing in the allure of luxury property.

They conjure images of one of Marge Simpson’s favourite magazines “Better Homes than Yours”, but if the public is obsessed, politicians too are obsessed by housing.

As are all Australia’s financial regulators, the Reserve Bank, the Australian Prudential Supervision Authority and the Australian Securities and Investments Commission.

Those three, together with the Federal Treasury, form the Council of Financial Regulators, a joint body strengthened during the financial crisis and instrumental in the response. And COFR too has recently concentrated its attention on housing.

Twenty-five years ago, Australia’s gross domestic was $A757 billion. Housing lending was $A93 billion – around 12 per cent of GDP. Today, GDP is $A1.67 trillion and housing lending $A1.65 trillion – 98 per cent of GDP.

Meanwhile, the percentage of housing lending attributable to investors has risen from 20 per cent to more than 50 per cent. (Although definitions differ but while the numbers may vary the trend is clear.)

In 1992 Australian mortgages made up 18 per cent of the Australian major bank lending – it is now 54 per cent. Interest only loans – where no principle is paid down and considered the most risk loan type – constitute around 40 per cent of new lending.

Housing matters.

Housing is not just a roof over a head, it’s a roof over the economy.

Andrew Cornell is managing editor at ANZ’s BlueNotes. For more go to