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You need to act on house prices – NAB

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    Records are falling rapidly as a huge property boom spreads across the country. Westpac and CBA have already predicted price increases in the order of 10% and now ANZ boss Shayne Elliott has just told the House of Representative Economics Committee that home prices could rise as much as 17% this year.

    Elliott says that there is no immediate cause for alarm, but regulators and banks need to keep a close eye on housing prices.

    He also told the committee that the lender’s mortgages to first homeowners have jumped to 35% of its business to owner-occupiers – that’s up 75% on a year ago.

    And while the homebuying frenzy is great news for brokers and lenders, it has to stop at some point – and this is where NAB CEO Ross McEwan is urging the authorities to take action.

    Speaking to the same committee as Elliott, McEwan said that he wants state governments to increase supply to ease market pressure.

    “I strongly support first home buyer incentives, but we know supply is restricted and the states need to streamline approval processes for land development and residential construction,” he told the committee.

    “Without decisive moves to increase housing supply, demand side incentives will inevitably act to push up house prices further and faster.”

    His recommendations are closely aligned with those of Westpac boss Peter King who told a banking conference that he thought supply restrictions were pouring fuel on a hot property market.

    “I don’t think bank debt is a driver of the housing prices, I think it’s a fundamental supply demand issue,” said King.

    And there may be new housing in the pipeline – figures released today by The Australian show that applications for the $25,000 HomeBuilder grant have smashed treasury forecasts by 400% – hitting a whopping 121,000. That number may well increase as the government is considering extending the grant for a second time.

    The Housing Industry Association has forecast a record level of housing starts, with 130,000 new detached homes projected to begin construction in 2021.

    Related stories:

    • "There is only one solution to this and that is supply"
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    Original Article