OECD Warns House Prices in OZ Need Cooling!

The OECD is warning of a ‘rout’ of housing prices should Australia hit a new economic downturn. Such strong language! What this reinforces is the extreme pressure that is coming to bear on the government to drive housing affordability. This makes it ever increasingly likely that the following will occur –

  • APRA will continue to place more pressure on lenders, making it harder to borrow money
  • The gap between the cost of investment debt and owner occupier debt will increase, as will the gap between the cost of interest only loans versus principal and interest
  • The RBA will need to have at least one rate hike this year, possibly two despite the negative impact this could have on the AUD and consumer spending
  • Government, both state and federal, will continue to outline measures to improve housing affordability as the Vic government did yesterday. (More on that another time)

As has always been the case, quality property will be least affected, while risk management strategies as part of your mortgage strategy and money management will come to the fore.

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