Recovering housing market at 6.30 on the property clock with no risk of a housing bubble: John Symond

Recovering housing market at 6.30 on the property clock with no risk of a housing bubble: John Symond
Recovering housing market at 6.30 on the property clock with no risk of a housing bubble: John Symond

Aussie Home Loans boss John Symond has dismissed concerns of a property bubble building in Australia and says the housing market has reached 6.30 on the property clock and is on the road to recovery.

Speaking at an Australia-Israel Chamber of Commerce function in Brisbane this week, Symond slammed the monetary policy decisions of the Reserve Bank, accusing the current board, led by RBA governor Glenn Stevens, of being “asleep at the wheel”.

“I am confident, notwithstanding a lot of hype from offshore analysts about a housing bubble, of Australia’s fundamentals,” Symond said in a speech reported by the Australian Financial Review.

Over the past few weeks newly appointed chairman of Swiss bank UBS Axel Weber has warned that Australia risked a future property bubble collapse while Patrick Winsbury, senior vice-president of Moody’s, has also expressed concerns about the effect lower interest rates could have on Australian property prices.

However, senior Australian figures have also warned of the risk of a housing bubble. They include Barry Brakey, head of property at the sovereign Future Fund, who said the overvaluing of Australian property was holding the fund back from investing more in Australia. Australian ANZ boss Phil Chronican also told Fairfax radio station 3AW that one had to worry “when there is a lot of cheap money around that results in asset price inflation”.

Earlier this week RBA deputy governor Philip Lowe told a Finsia seminar in Hobart that while the bank was not overly worried about relatively low interest rates reigniting a housing boom because household appetite for debt is relatively low, it would "continue to monitor the housing market closely”.

But Symond dismisses the threat of a housing bubble and says interest rates are too high.

He believes the housing market is a healthy state and the housing market has bottomed out.

 


 

“If anything, I am just starting to feel the property clock for housing is at half past six, or about 28 minutes past the hour,” Symond says.

Symond says demand from Asia will help underpin the value of the Australian property market

“Don’t underestimate the impact of Asians buying our residential property. They send the kids to our universities, find out it’s a great country and buy a small apartment, then buy a house,” he said.

In his attack of the RBA, Symond said Australia had had a history of having very smart Reserve Bank governors “but in the last two years, I have got to tell you, I think the Reserve Bank has been asleep at the wheel”.

“They have left interest rates comparatively high. Well for the last 12 months, blind Freddy could see inflation was not a problem, so why has the RBA been holding off?”

The remarks are curious, since Glenn Stevens has been governor of the Reserve Bank for the past six years, replacing Ian Macfarlane in September 2006.

Stevens has also been lauded for the decisive action he took during the GFC, when the RBA cut the cash rate in 100-basis-point chunks to stimulate the economy.

Last weekend London’s Sunday Times reported that Stevens was on a shortlist to be the next governor of the Bank of England.

While suggestions that Stevens would take on the UK role if offered were quickly dismissed by Australian reports as unlikely, it does show that he is held in high regard beyond Australian borders.

Stevens is one of the highest paid central bank governors in the world, earning just under a $1 million a year – more than his opposite numbers at the US Federal Reserve and the European Central Bank.

The Bank of England role pays $480,000 a year.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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