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ANZ chief's concern about 'unhealthy' property prices

Jessica Yun
·2-min read
BRISBANE, AUSTRALIA - DECEMBER 17: The CEO of ANZ Shayne Elliott speaks at the ANZ annual general meeting at the Brisbane Convention & Exhibition Centre on December 17, 2019 in Brisbane, Australia. ANZ is looking to avoid a second strike over executive pay packets following aggressive changes to renumeration plans including drastic reductions in executive bonuses as it confronts retail shareholders today. (Photo by Bradley Kanaris/Getty Images)
ANZ CEO Shayne Elliott. (Photo by Bradley Kanaris/Getty Images)

ANZ chief executive Shayne Elliott has revealed concerns about the impact of Australia’s towering property prices on the social and political fabric of the country.

Speaking on Thursday, Elliott said he believed the property market’s upturn would “go on for quite a while” amid high demand for housing.

Australian house prices have been climbing for several consecutive months, with CoreLogic’s latest figures revealing that house prices rose at its fastest pace in 17 years during the month of February.

But a continued rise in house prices would threaten the nation’s stability, Elliott said.

“I think extreme moves either up or down are never probably very good if they're sustained for a period of time. So it's starting to get into that area where people are starting to raise a few eyebrows, wondering if it's a bit unhealthy at these levels,” Elliott told 3AW Radio.

“Certainly it can't keep going at sort of double digit rates for very long because you start getting real social and political problems as a result. And nobody wants that.”

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Interest rates will also rise “at some point”, he added, saying there was “a lot of money sloshing around” from unprecedented levels of government stimulus that people are pouring assets, housing, and stocks.

This would eventually lift consumer prices and inflation figures, which could cause rates to rise.

“The Reserve Bank would, I imagine, be forced to act at some point. I mean, they've sort of said they're not intending to do that for a couple of years. But things change,” he said.

Earlier this week, Canstar financial expert Steve Mickenbecker warned the RBA could hike rates earlier than expected, saying there was a “perfect storm for house prices”.

The “power” of near-zero interest rates have been underestimated, Elliott added, saying that this had kick-started the property market and the construction sector by way of engaging trade workers to perform renovations.

In its monthly meeting on Tuesday, the Reserve Bank board decided to leave rates on hold at 0.1 per cent and said it would likely not raise this for years.

“The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. For this to occur, wages growth will have to be materially higher than it is currently,” it said in a statement.

“This will require significant gains in employment and a return to a tight labour market. The Board does not expect these conditions to be met until 2024 at the earliest.”

Meanwhile, fears of inflation have risen among global investors as the economic recovery pushes up US Treasury bond yields, triggering a sell-off in Wall Street stocks.

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