AUSTRALIA: Review needed to avoid NZ-style housing intervention

PHOTO: Australian real estate agents are having a great run. Photo – Tory Packer. The West Australian.

Australia’s biggest bank has warned proactive steps must be taken now to avoid a New Zealand-style government intervention in a bid to cool soaring house prices.

Commonwealth Bank chief executive Matt Comyn was speaking on Thursday at a parliamentary hearing on the four major banks when he was asked about what could be done to curb residential property prices.

“We think it would be important to take some modest steps sooner rather than later to take some of the heat out of the housing market,” Mr Comyn said.

“I think it would be prudent to act sooner rather than later.”

CBA Tech Briefing With Ceo Matt Comyn — **Matt Comyn says a review may be needed as Australia’s residential property prices continue to soar. Adam Yip Credit: News Corp Australia**

Residential property prices in Australia have soared by 16.8 per cent over the past 12 months as low interest rates drive demand from first homebuyers and investors.

Asked what must be done to create a more sustainable housing market, Mr Comyn said a review into taxation, zoning laws and transportation was needed.

“I certainly don’t have the answers … I do think this is a good area of considerable review,” he told the committee.

Mr Comyn flagged that the bank had raised its serviceability floor – the rate at which the bank tests a person’s ability to pay if interest rates rise – as an instrument to cool the market.

“I think we all would have our share of concern about making sure that Australia’s households are in a strong position to continue to repay, but also support broader consumption in the economy in the second half of this decade if interest rates are rising, and if potentially they would rise more quickly,” he said.