Australian housing at risk from further crises

Australia’s housing market remains susceptible to ‘black swan’ events such as major overseas conflicts, a potential market collapse in China or natural disasters like the Queensland floods.

That is the view of Brian Haratsis, chief executive of property research and advisory firm Macro Plan Australia, who is making a presentation at today’s Australian Mortgage Conference.

Australia’s property market is inflated by around 20 per cent, posing genuine risks to our stability, said

“We need to be asking what we can do to reduce the cost of housing over the next decade through regulatory and taxation means to avoid such a threat to the mortgage industry and economy as a whole,” he said.

“Australia faces a supply and demand issue, as we are currently under built but require a further 300,000 workers per annum moving forward to meet labour demands.  If we can’t accommodate this growth from a housing or construction perspective, where will that leave us?” Haratsis said.

Alan Shields, research director for RFi, said that we are already seeing shifts in housing and population, and new financial products being developed will need to cater for Australia’s aging population, urbanisation and increasing online information sharing.

Government regulation may serve to either restrict or enhance competition in the lending market in the post global financial crisis environment, according to Allen & Overy partner Dave Poddar.

“We need to address whether the proposed new forms of funding will be adequate or if they could be improved, and whether they will in fact help or hinder smaller institutions in competing with the major banks to benefit consumers,” he said.

“A continued constructive approach to sources of funding for financial institutions is needed to help re-energise the dynamics of competition in the Australian financial services industry, particularly for the smaller financial institutions, rather than encouraging further rationalisation of credit unions and banks,” he said.