Constraint on credit a growing concern for new and established housing: NAB

For the tenth consecutive quarter, property experts identified tight credit as the biggest constraint on new housing development in the country, according to the latest NAB Residential Property Survey.

Moreover, they said it was causing more concern than at anytime since mid-2011.

Clearly, intensified lending scrutiny by banks and APRA-inspired tighter credit policies has played a key role.

Tight credit was also singled out as the biggest constraint for new housing development in all states - particularly in NSW where it was viewed as a ‘very significant’ constraint.

The overall level of concern over rising interest rates also grew. It was seen as being most problematic by property professionals in NSW and SA/NT and least problematic in VIC.

Property professionals overall were less concerned about all other factors, especially around lack of development sites and labour availability.

Access to credit remains the most ‘significant’ impediment for buyers of existing property as well according to surveyed property professionals.

It was also seen as a much bigger issue than in the last survey and more so than at any time since the Survey began. In fact the property experts surveyed in all states considered access to credit to be the most ‘significant’ issue in their state.

Rising interest rates replaced employment security as the second biggest issue for buyers of existing property in Australia - and in all states expect VIC (house price levels) and WA (employment security).

Heightened concern about interest rates is consistent with NAB’s view of the market.

The author's of the survey stated:

"We expect growth to remain above trend which should see the labour market tighten, wages growth lift and inflation more broadly begin to rise.

"As spare capacity is reduced, and inflationary pressures become more evident, the degree of accommodation in monetary policy will be gradually reduced, with the RBA starting a process of rates normalisation towards a more neutral setting."