Housing market well regulated: investor

AUSSIES should have faith that the Reserve Bank and prudential regulator can fire up the housing market again if prices fall too far, one of the nation’s leading investors says.

Australian Super chief investment officer Mark Delaney says the central bank and Australian Prudential Regulatory Authority deserve more credit for taking “economic and societal” risk out of the sector.

“I think the Reserve Bank and APRA have done a really good job in taking the steam out of the housing market — it couldn’t continue the way it did,” Mr Delaney said.

“People will never applaud the regulator for keeping things safe but they have done a tremendous job. It was generating economic risk issues as well as societal risk issues.”

Mr Delaney said there were three potential threats that could weigh on investment re- turns in the coming year: a cyclic slowdown in global share markets, a trade war and a crash in the housing market.

A housing market collapse was least likely, he said.

Mr Delaney said speed limits ushered in by the banking regulator around investment property lending, in particular interest-only loans, were proving effective, along with restrictions on foreign ownership.

“I think that by their actions … APRA and the RBA have been quite skilled at slowing down the amount of funding going into the housing market,” he said.

Australians should not panic if house prices fall.

“If house prices come off a little bit, I don’t think they will be too concerned as they went up so far,” he said. “But if [the regulators] are able to restrict the supply of capital going into the housing market, they are also able to change those policies at the right time.”

Asked how often he was quizzed about the outlook for the housing market, Mr Delaney said it happened rarely.

“Its amazing how confident people are about their own opinion of the housing market,” he said.

Australian Super revealed its “balanced option” chalked up a return of 11.08 per cent for the financial year to June, down from 12.44 per cent the previous year but above the 8.3 per cent rise in the ASX 200 index.

Mr Delaney said that after meeting RBA officials, he was confident “on average, housing repayments are not at challenging levels because of the very low interest rates”.

“Debt levels are high but the repayments aren’t much different to normal,” he said.

The big banks, under pressure from APRA, are pushing customers with interest-only home loans to switch to loans with principal-and-interest repayments.