Morning Briefing: Debate whether APRA changes will protect Sydney and Melbourne

new homesDebate whether APRA changes will protect Sydney and Melbourne.

The head of one of Australia’s largest developers believes the enforced slowdown of lending to investors has reduced the risks present in major real estate markets.

The Australian Prudential Regulation Authority (APRA) mandated earlier this year that lenders should not allow investor home loan growth to exceed 10% a year.

Stockland chief executive Mark Steinert believes that move has prevented markets, in particular Sydney and Melbourne, from being hit by a wave of housing over supply.

“A lot of the supply that potentially could cause a problem is not going to be built this cycle because developers won’t get the funding,” Steinert told The Australian earlier this week.

But Todd Hunter, founder of buyer’s agency wHeregroup, believes APRA’s moves are too late to have any real effect on the health of the markets.

“It takes 12 months to three years to go through the approval and DA stages, so the APRA changes might keep some developments that would come online in a few year from happening but that’s about it,” Hunter said.

“But there’s already a lot of stock coming online now and it’s going to miss the boom anyway. It’s too late to say the changes are really going to do anything.”

Hunter said there are over challenges facing the markets as well that are more pressing than oversupply.

“Low interest rates can only sustain a market for so long,” he said.

“At some stage it becomes a question of affordability as well and that’s what we’re seeing now.”

Australia’s cities minister sounds warning as Sydney sprawls

(Bloomberg) -The populations of Sydney and Melbourne are set to almost double by 2060, Australia’s new Cities Minister Jamie Briggs said, sounding a warning that ailing infrastructure and surging house prices must be tackled to ensure they remain livable.

“For a country that brags about the fact we’re a big, wide land we live in very small urban spaces,” Briggs, who was appointed last month by new Prime Minister Malcolm Turnbull, said in an interview in Canberra Wednesday. “That trend is only going to continue.”

The nation’s major cities are coming under increasing pressure as public transport and roads fail to keep up with population growth. The inclusion of a cities minister in Cabinet indicates Turnbull’s commitment to urban planning and its importance to unlocking productivity and economic expansion.

Turnbull, a self-made millionaire who ousted Tony Abbott last month in a ballot of governing party lawmakers, is renowned for using public transport in his home city of Sydney and last week was pictured riding a tram in Melbourne.

Another challenge is runaway house prices in Sydney and Melbourne, where first-time buyers are being priced out of the market. Dwelling prices climbed 24 percent across the country in the three years to Sept. 1, led by Sydney with a 46 percent increase, according to CoreLogic.

“There’s intergenerational inequity developing,” said Briggs. “Our parents and generations before could access houses that were close to their workplace. Now it’s a lot harder to do and we’re seeing the number of young Australians buying their first house drop. The jobs haven’t sprawled like our suburbs have.”