RBA notes banks curtailing Brisbane apartment lending given oversupply fears
The RBA has noted that some banks had curtailed lending to some segments of the housing market, notably the Brisbane apartment market, where the supply of apartments was expected to increase significantly, raising the risks associated with oversupply.
But the RBA acknowledged reports of settlement failures had remained isolated.
Conditions in housing markets continued to vary considerably across the country, the April minutes noted.
"The established markets in Sydney and Melbourne appeared to have strengthened further, but housing prices had continued to fall in Perth.
"The additional supply of apartments scheduled to come on stream over the subsequent couple of years in the eastern capital cities was expected to put some downward pressure on growth in apartment prices and rents, particularly in Brisbane."
It also noted vacancy rates had been increasing, particularly in Perth.
"Strong growth in the supply of new apartments was continuing to drive a wedge between price growth for apartments and detached houses in Melbourne and Brisbane."
It noted members discussed the recent actions taken by APRA and the Australian Securities and Investments Commission to support prudent lending practices.
"These actions had been focused particularly on interest-only lending, serviceability assessments and responsible lending practices.
"APRA's guidance had included limits on the share of interest-only loans in new housing loans and a requirement that banks impose strict limits on new interest-only lending at high loan-to-valuation ratios.
"Members recognised that the calibration of this guidance was not precise or straightforward.
"Developments needed to be kept under review and, depending on how the system responds to the various measures, members noted that the Council of Financial Regulators would consider further measures if needed," it concluded.
