Could the Royal Commission disrupt Australia's housing supply?

Representatives of Australia’s housing industry are concerned that increased scrutiny from the banking Royal Commission could disrupt the nation’s mortgage lending, which could in turn affect future housing supply.

The comments from the Housing Industry Association (HIA) come on the back of the release of Building Approval figures from the Australian Bureau of Statistics (ABS), which show strong quarterly growth in detached house approvals.

HIA senior economist, Shane Garrett, said that while the quarterly performance of detached house approvals was 9.9 per cent higher than a year ago, and the strongest recorded for any three-month period since 2003, sustained in part by healthy population growth and robust labour markets in Australia’s largest cities, risks remain on the horizon:

“It appears that the banking Royal Commission has already led banks to increase their scrutiny of mortgage lending. If this results in a protracted disruption to the mortgage market then there are likely to be ramifications for the home building industry.”

Further risks to future housing supply described by Mr Garrett included stiffer tax burdens on foreign buyers of multi-unit apartments in most states, as well as tighter regulatory conditions, which saw multi-unit approvals cool by 9.4 per cent over the three months to April 2018.

ABS director of construction statistics, Justin Lokhorst, said Australia’s total dwelling approvals have been relatively stable for the past eight months, staying at around 19,000 dwellings approved per month.

“The strength in approvals for houses is being offset by weakness in semi-detached and attached dwelling approvals.”

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