Tougher home lending conditions not the answer for WA

Blog by REIWA - 22 March 2017

The Real Estate Institute of Western Australia (REIWA) and Urban Development Institute of Australia WA Division (UDIA WA) have slammed talk of tightening home lending conditions across the country.

REIWA President Hayden Groves said this was a knee-jerk reaction to market conditions on the east coast, in particular the Sydney and Melbourne markets, and did not take into account the varied market circumstances of all states and territories.

“Western Australia’s property market has softened considerably over the last couple of years. If lending conditions are made tougher for existing home owners, new home buyers and investors in WA, this will have a detrimental effect on our local housing market which is just starting to show signs of stabilisation,” Mr Groves said.

UDIA WA CEO Allison Hailes said imposing further lending restrictions may be viable on the east coast where the market is heated, but in WA it will do more harm than good.

“Decision makers in the eastern states need to take WA’s delicate economic and property market situation into account before introducing any changes, otherwise we could see the green shoots that are just starting to emerge killed off,” Ms Hailes said.

“Affordability remains a significant issue for West Australians, with the recent slowdown in the mining sector and challenging economic conditions continuing to present difficulties. Tightening lending conditions in WA will have an adverse effect on affordability for West Australian home buyers, owners and investors,” Mr Groves said.

Lending finance for investment represents a substantial proportion of the WA property market, with 35 per cent of all lending in the state attributed to investors.

“Even if this regulation is only applied to investors, increasing borrowing costs would mean investors have no choice but to pass this down to tenants and would also limit the number of investors entering the market,” Mr Groves said.

“Not only will stricter lending conditions negatively impact potential purchasers, they will impact directly on the construction of new homes and therefore jobs,” Ms Hailes said.

REIWA and UDIA WA call on State Treasurer Ben Wyatt to address this issue at a national level to ensure regulators thoroughly consider the negative ramifications additional lending restrictions would have on the WA property market.

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Tougher home lending conditions not the answer for WA