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In fixing the issues highlighted by the royal commission, the authorities must avoid creating new problems in the economy, especially around the provision of credit for qualified borrowers, the Property Council of Australia has said.
It added that the report of the Hayne royal commission comes at a critical time for the property industry.
Chief executive Ken Morrison,said strong, stable financial system is the lifeblood of the industry.
“How government, regulators and financial institutions themselves respond to the Hayne recommendations will have direct consequences for first home buyers, up-sizers and down-sizers, property investors and the 1.4 million Australians who work in the property industry.”
Mr Morrison said the residential property market is worth almost $7 trillion which is 3.5 times the size of the Australian stock market.
“There is already plenty of evidence of the significant impact the tightening of credit is having on buyer demand and property values,” he said.
“This is particularly noticeable in the market for new homes and apartments.”
The council said the latest ABS data on housing finance showed a 2.5 per cent decline in the value of dwelling commitments in the year to November 2018, including a 4.5 per cent drop in the value of commitments for investment property.
It also said the ‘ANZ/Property Council Industry Confidence Survey’ for the March 2019 quarter reported that expectations around the availability of debt finance over the next 12 months has fallen to its lowest level since the survey’s inception since its inception in 2011.
Mr Morrison said that at this stage of the property cycle, and particularly set against the large drop in residential property values in the country’s biggest cities, Australians will be looking for policy responses that deliver certainty and drive confidence.
“Access to credit matters for people looking to buy new or established properties, including first home buyers,” he said.
“The property industry also underpins state and territory government budgets, accounting for more than half of their total revenues.
“A strong property industry delivers great places for Australians to live and work, provides jobs and drives economic growth, and helps Australians save for their future. The government’s response to the Hayne royal commission must fix the problems of financial services without damaging the rest of the economy.”
