REINSW admits 95% LVRs are dangerous, but warns off inappropriate RBA rate hikes

The Real Estate Institute of New South Wales has called on the Reserve Bank of Australia to avoid restricting the property market by pushing up interest rates and expressed their disappointment at RBA governor Glenn Stevens’ property warnings.

REINSW president Malcolm Gunning said that six months ago Stevens was encouraging investment in real estate.

“Now that the public is buying properties with confidence the RBA has changed its mind and is being critical, giving warnings about investing in an over inflated market,” Gunning said.

“We are very disappointed that RBA Governor Glenn Stevens is trying to restrict investment in property by sending out warnings about buying property.”

He said that they are not only disappointed that the RBA is providing this advice, but also that they have “singled out” property.

“The fact is that investors are more confident about putting their money in Australian property compared to the uncertainty of the share market and the underlying mistrust of this sector following on from the GFC,” he said.

Gunning said that they admit that low LVRs of 95% are dangerous, but notes that the practice should be curbed by asking banks to be more responsible with their lending, rather than turning to interest rates to restrict the market.

“Using a broad tool such as interest rates to affect one sector of the market is unjust on all areas of the market and is inappropriate,” he said, noting they’ve regularly been used as a quick fix.