Forget curbing mortgages. It’s housing stock that needs attention

9 Rudder Court, Mermaid Waters, has broken the suburb record, selling for $4.3m.
SOARING house prices have finally caught the attention of regulators and the federal government, which last week announced its support for a crackdown on high-debt loans.
Tightening lending conditions will keep in check borrowers who have become a little too comfortable with the flow of “cheap money”, a result of rock-bottom interest rates.
APRA, the financial services industry regulator, reports that 22 per cent of borrowers have mortgages with a loan to income ratio of six, which it finds concerning.
Should the RBA ever decide to raise the base rate, it would throw a lot of mortgagees into turmoil.
13 Deodar Drive, Burleigh Heads, made gains of $550,000 in just three months.
While any measures that stop individuals from amassing out of control debt should be applauded, I’m not convinced clamping down on high-value loans will achieve the drop in house price growth the federal government is hoping for.
Today’s housing boom has occurred off the back of a rare event, which created a number of unexpected outcomes.
Early predictions of a bust didn’t materialise. Instead homeowners nationwide have watched the value of their properties climb 20.3 per cent over the past 12 months, the fastest pace in price growth since 1989, according to Core Logic data released on Friday.
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In hotspots such as the Gold Coast, some suburbs are experiencing rises far in excess of that.
Sales of properties such as The Palms at 13 Deodar Dr in Burleigh Heads, which achieved a $550,000 uptick in price in as little as three months, and the Miami beachfront villa that commanded $1.3m above its reserve price at auction, illustrate just how crazy the situation is becoming.
A beachfront villa at 2/6 Marine Parade, Miami, sold under the hammer for $4.51m, $1.3m above its reserve.
I’ve lost count of the number of suburbs which have smashed their record prices this year, many more than once, including Mermaid Waters, where the record was broken last week for the sixth time with the sale of 9 Rudder Court for $4.3m. The price paid was almost $800,000 more than the previous record sale in June. In 12 months, the median house price in the suburb has rise by more than 33 per cent, from $970,000 to $1.29m.
However, addressing this unexpected runaway housing market with the same age-old macroprudential measures may not be the best way forward this time, at least not when it comes to cooling house prices.
A large proportion of the sales occurring on the Gold Coast, particularly those at the very high end, which are the ones that help to inflate suburb medians, are to cash buyers, or those not dependent on finance.
I can’t imagine Clive Palmer was grappling with his bank manager before dropping almost $30 million on three homes in Sovereign Islands last month.
The region is awash with people with plenty of cash, and in the absence of a decent savings rate and the presence of an unstable stock market, they are ploughing it into bricks and mortar.
Clive Palmer snapped up 35 Parklane Terrace, Sovereign Islands, for $4.5m the same month he paid $20 million for his neighbour’s home.
Southern buyers, desperate to escape lockdowns, are pouncing on property in the Sunshine State. We have what they want – good weather, a great lifestyle, room to move, and comparatively affordable housing – so they don’t think twice about spending millions on a house they have never set foot in.
No, the issue here isn’t out-of-control finance, it’s a lack of housing stock.
According to the latest report from SQM Research, total national property listings have been steadily falling over the past 12 months to sit at just more than 200,000 – a record low.
By way of comparison, between 2011 and 2019, a period that recorded two upturns and one down turn, national available listings ranged between 380,000 to 300,000 dwellings.

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var result = minutes + “:” + (seconds < 10 ? "0" + seconds : seconds); return result; } })(window.videojs); “As a result, market liquidity has nearly halved. In 2008, up to 4.5 per cent of all residential properties were available for sale at any one point in the market. Today the percentage available is below 2.5 per cent,” the report states. SQM blames stamp duty and sales taxes for putting the brakes on people moving, an accusation that has been echoed by the Real Estate Institute of Australia. I don’t think these are the only issues but until the federal government and policymakers start to address the things that are impacting stock levels and the lack of housing in general, prices are bound to keep on rising. The post Forget curbing mortgages. It’s housing stock that needs attention appeared first on

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