Moody’s has suggested that Australia may be encouraged by New Zealand’s actions to loosen macro-prudential measures.
In a 14 December report, Moody’s noted that housing regulation in New Zealand tends to lead Australia’s by at least a year.
The ratings agency noted that the Reserve Bank of New Zealand was on the front foot trying to cool certain heated housing pockets, such as Auckland, well before APRA introduced housing-targeted measures, even though both economies were experiencing strong price growth in some areas.
“Just recently, the RBNZ announced it had eased some macro-prudential measures in light of softer house price growth. Now that Australia’s housing market has cooled, APRA may follow suit with minor reversals in the next year,” Moody’s said.
In a 15 December blog post, Digital Finance Analytics (DFA) principal Martin North said that he is not convinced that APRA will scale back its macro-prudential measures, given credit for housing “is still running at three times [the] income growth and at very high debt levels”.
“I find it weird that there is a fixation among many on home price movements, yet the concentration and level of household debt (and the implications for the economy should rates rise) plays second fiddle,” Mr North said.
“Also, the NZ measures were significantly tighter, and the recent loosening only slight (and in the face of significant political measures introduced to tame the housing market). So, we think lending controls should be tighter still in 2018.”