Media Release

The recent official interest rate cut might have sparked some homebuyer interest in the inner suburbs but it has had zero effect on greenfield and regional land and house sales.
It is time Australia’s banking watchdog cut its 3 per cent home loan serviceability buffer to safeguard the housing sector and help those desperate first homebuyers still unable to enter the market.

The Australian Prudential Regulation Authority needs to reinstate the pre-pandemic 2.5 per cent home loan margin to help re-boot the market and tackle the country’s housing crisis.

Reducing this buffer margin is the best way of boosting the housing market without adding to inflation.

The industry is losing sales from people who pay a deposit on a block or house-land package, only to then discover the impact of the 3 per cent margin forces them to cancel their purchase.

The February 0.25 per cent cut to interest rates – together with another cut anticipated later this year – could help get some homebuyers into the market but the greenfields remain a key stumbling block.

Which is why APRA has to step up and do its bit.

This would be the least inflationary means of getting more housing starts going and prevent governments falling further behind on their housing targets.

Rory Costelloe, Villawood Properties Executive Director