‘Relaxed’ with lower house prices
ANZ's David Hisco is breathing a little easier these days.
Hisco, who heads up New Zealand's biggest bank, hit the headlines in 2016 when he said Auckland house prices were “overcooked”.
“In the quick snack media world in which we live, sadly many are making decisions based on the last headline or quote rather than research and facts,” he said.
“Here is a fact — property markets can and do go backwards,” he wrote in an opinion piece for the Herald.
Hisco, in an interview following the release yesterday of the bank's record $1.9 billion profit for the September year, said his comments were aimed at trying to take heat out
of the market. “The comments I made in 2016 were really aimed at trying to bring price rises into land in a soft way,” Hisco said. “What we have seen now is house price inflation fall pretty much back to zero,” he said.
Pressures in the housing market started to moderate due to the tightening of LVR restrictions in October 2016, a more general firming of bank lending standards and an increase in mortgage interest rates in early 2017.
The Reserve Bank eased LVR restrictions a little in January this year.
Hisco said LVR restrictions had helped first-home buyers to get back into the market.
“Overall, I feel much more comfortable that we are seeing the market pretty much sit flat,” he said. “But just remember that it still requires a large portion of people’s salaries to get set in the home loan market. It is still very hard if you are a first-home buyer — you still need to slog away at putting together the best deposit that you can,” he said. “But at least there is some light at the end of the tunnel for first-home buyers because they are not chasing a market that seems to be running away on them.”
The Reserve Bank, in its financial stability statements, has singled out dairy farm debt as being a reason for concern but Hisco said ANZ had worked to get its farm lending book back in shape.
Commenting on the bank’s result, Hisco said ANZ had operated in a benign environment, with virtually no bad debt writeoffs. “Obviously you have to take sufficient risks to ensure that you are in the game, but it’s been very, very clean,” he said.
Hisco said the trend of lower bad debt writeoffs had been in place since the end of the GFC. “That won’t last forever.”