Further rate cuts won’t cause a housing bubble: Harry Triguboff

The point where Meriton boss Harry Triguboff paused to smile in a 10 minute interview with Financial Review Sunday was when he spoke about interest rates and housing bubbles.

An advocate for further rate cuts until they encourage Australians to buy his high-rise apartments, Triguboff said there should be more confidence in Australia about cutting interest rate given the mining boom experience.

“If the mining boom didn’t create any great bubble in the prices of apartments then half a percent here or there [cut from the cash rate] definitely won’t cause a bubble either.

“So from that point of view we are very happy because we (Australia) now realise this,” said Triguboff.

Earlier in the interview, Triguboff said there was no boom in the housing market at the moment, nor does he want one.

“I don’t want a property boom. We are very far away from property boom. It’s not something we should worry about at this stage.”

Instead he said what was important was continuous growth in the building industry to support population growth.

“We can’t have start and stop in the building industry, we must build continuously.

“This has nothing to do with [the slowdown] in mining.

"Housing development must progress all the time and at faster rate,” he said.

Triguboff identified three things that were needed to stimulate the housing market to aid a sustained recovery.

He was once again critical of the RBA for not acting sooner to cut the cash rate, he highlighted the slowness of local councils to approve new developments as well as the actions of some building unions in parts of Queensland as standing in the way of a stronger residential building pick-up.

“Councils need to approve developments a lot quicker – they are a big bottle neck,” he said.

He said unions need to assist with production of new apartments in markets like the Gold Coast, which are weak.

Chinese investors continue to be the mainstay of Meriton apartment sales, though lower rates have resulted in some Australian buyers and investors coming back.

“We need rates to come down a lot more.

“Rates coming down so far have made it a lot cheaper to hold apartments and I am holding a lot more,’ he said, referring to Meriton stock of serviced apartments and apartments available for lease.

He also said the low rates environment and “rents creeping up” were making it more conducive for investors.

“Before they (investors) would have to pay 7.5% but now it’s 5% - that’s a big difference.

However, he says home buyers believe that the cost of renting and repaying a home loan is about the same, “so they are in no hurry to buy”.

"If prices start to continuously go up then more people will come, but prices have only now started to go up," he says.