Growing property prices and household debt has led the Commonwealth Bank (CBA) to feel “increasingly concerned”.
Speaking at the Economic Committee, CBA CEO Matt Comyn said it might be worthwhile taking steps now to cool the overheated property market.
“It would be important to take some modest steps sooner rather than later to take some heat out of the market. Based on acceleration, I think it would be prudent to act sooner rather than later,” Comyn said.
Comyn suggested that it would be beneficial to have a regular meeting with the Reserve Bank of Australia (RBA) and the Australian Prudential Regulation Authority (APRA) to work together in cooling the market.
CBA is Australia’s largest lender, so in the event of Australia’s property bubble bursting many of its customers may be left with large amounts of debt they are unable to repay the bank.
RBA considers stepping in
The ever-growing property market, and any potential house price crashes, poses a potential “financial stability risk,” Bullock said.
“The prospect of large declines in property prices presents significant balance sheet risks for households, businesses and lenders,” she said in a speech on Wednesday.
Property growth expected to slow next year
The Australian property market has grown a massive 16.8 per cent so far this year with expectations that could climb as high as 20 per cent by the end of the year.
All capital cities registered as of June this year, the largest annual increases were in Sydney (19.3 per cent) Canberra (19.1 per cent) and Hobart (17.7 per cent). All other cities were up by between 12.8 and 15.0 per cent, according to the most recent CoreLogic data.
However, experts predict that growth will slow to around 7 per cent in 2022. So, while prices will still be rising it will be at a much more reasonable rate than we have experienced so far.