Regulators considering options to calm housing market risks

Financial regulators look set to take steps to rein in housing market risks and are preparing to release macroprudential policy options.

In its September quarterly statement, released yesterday, the Council of Financial Regulators said a key item of discussion at its Friday meeting was housing market risks and possible macroprudential policy responses.

It noted that the Australian Prudential Regulation Authority (APRA) would continue to consult with it on the implementation of any particular measures. In addition, APRA plans to publish an information paper on its framework for implementing macroprudential policy over the next couple of months.

The council said housing credit growth had picked up over the first half of the year among both owner-occupiers and investors.

“The recent lockdowns have reduced transactions and new listings, but prices are still rising briskly in most markets,” it added.

“Commitments for new housing loans remain at a high level, suggesting that credit growth is likely to remain relatively strong. The council is mindful that a period of credit growth materially outpacing growth in household income would add to the medium-term risks facing the economy, notwithstanding that lending standards remain sound.”

The council is chaired by Reserve Bank of Australia governor Philip Lowe. Other members include APRA chair Wayne Byres, Australian Securities and Investments Commission chair Joseph Longo and Treasury secretary Steven Kennedy.

Treasurer Josh Frydenberg and the Australian Competition and Consumer Commission attended part of the council’s Friday meeting.

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