‘That’s an awful lot of apartments’: RBA calls out Brisbane glut risk

Written by admin on 28/09/2019 Categories: 广州桑拿

Assistant Governor of the Reserve Bank, Michele Bullock, addressing a crowd at Bloomberg in Sydney. 14th March 2017 Photo: Janie BarrettA senior Reserve Bank official has flagged concerns about the “awful lot” of apartments due to flood the Brisbane property market, and the potential hit facing investors who had bet on making capital gains.
Nanjing Night Net

Michele Bullock, assistant governor for the financial system, on Thursday signalled that the RBA’s long-running worries about an oversupply of apartments were most acute in relation to Brisbane, but it was more comfortable with the wave of high-rise construction in the other east coast capitals.

The central bank had previously warned Melbourne’s apartment market was also a risk, but Ms Bullock said fast growth in the city’s population was likely to absorb the extra supply of units.

The RBA’s Financial Stability Review last week also noted there had been “small declines” in the prices of some new apartment developments in Sydney, but it did point to specific risks of an apartment oversupply in the city.

With apartment prices and rents already falling in Brisbane, and some banks tightening their loan conditions, Ms Bullock said there was potential for further price declines in the Queensland capital.

“The current stock is due to increase by 25 per cent in the next two years. That’s an awful lot of apartments to come into Brisbane,” Ms Bullock said at an Australian Shareholders’ Association meeting in Sydney.

“What you’re already seeing in fact, is rents and prices declining. So we’re a little bit concerned this supply is going to cause issues.”

Ms Bullock made the comments in a speech outlining the key concerns the RBA is watching, even though it believes that overall, financial stability risks have diminished in recent months.

The warning comes after Queensland bank Suncorp this week imposed new caps on lending for inner-city Brisbane apartments, saying it would require deposits of at least 20 per cent of the purchase price when writing new loans for apartments in some CBD and metro areas. ANZ Bank last month also said it would impose tougher loan conditions in parts of the city.

Ms Bullock said Brisbane’s market did not appear to represent a significant risk to the country’s banks, citing their strong capital positions, and improvements in credit standards.

However, she said the potential for price falls was “raised” because of the large number of apartments being developed, and this might lead to “hardship” for some investors.

“Provided they’ve got good enough security, I think the banks will be fine, they’re well capitalised. From a financial stability perspective, one of the things we are also concerned about though is the human aspect. If prices start to decline, then might cause some concerns and hardship for people,” Ms Bullock said.

“Banks might be OK, but the households might struggle.

“There’s a bit of a concern that if people were investing in Brisbane expecting capital gains, expecting prices to rise, this mightn’t occur.”

Overall, the RBA believes financial stability has improved over the past six months due to a strengthening global economic backdrop, but it continues to see housing debt as a key economic risk.

This story Administrator ready to work first appeared on Nanjing Night Net.

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