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The Real Estate Institute of WA and Urban Development Institute of Australia WA Division have dismissed talk of unilateral credit tightening as a way to cool property prices as reactionary and ill-advised.
REIWA president Hayden Groves says claims of unilateral credit tightening are a knee-jerk reaction to market conditions on the east coast, in particular Sydney and Melbourne, and do not take into account the different market circumstances of all states and territories.
“Western Australia’s property market has softened considerably over the last couple of years,” Mr Groves said.
“If lending conditions are made tougher for existing home owners, new home buyers and investors in WA, this will have a detrimental effect on our local housing market which is just starting to show signs of stabilisation.”
Mr Groves said affordability remains a significant issue for West Australians, with the recent slowdown in the mining sector and challenging economic conditions continuing to present difficulties.
“Even if this regulation is only applied to investors, increasing borrowing costs would mean investors have no choice but to pass this down to tenants and would also limit the number of investors entering the market.”
At 35 per cent, lending finance for investment represents a substantial proportion of the WA property market.
Urban Development Institute of Australia WA Division CEO Allison Hailes said such action may be viable in the eastern states, but it will do more harm than good in WA.
“Decision-makers in the eastern states need to take WA's delicate economic and property market situation into account before introducing any changes,” Ms Hailes said.
“Otherwise we could see the green shoots that are just starting to emerge killed off. Not only will stricter lending conditions negatively impact potential purchasers, they will impact directly on the construction of new homes and therefore jobs.”
