No low-doc helps ensure no housing market crash, says Treasurer Scott Morrison

Treasurer Scott Morrison has reassured US investors – and Australian mums and dads – that Australia is not heading towards any housing market crash.

He noted house prices were high but their value was still "real".

In a speech in New York to investors overnight, Mr Morrison pushed back at a recent warning from the International Monetary Fund about particularly high levels of household debt in Australia.

He pointed to a series of measures taken by prudential regulator APRA to constrain access to credit.

"The rise in housing values has been driven principally by genuine economic forces of supply and demand, where mortgages are subject to full recourse finance, supported by a strong, stable and resilient banking system and world's best practice credit standards.

"Low or no doc loans that crippled US housing markets are a rarity in Australia."

Morrison acknowledged household debt in Australia was high, with about 80 per cent of Australia's $2.1 trillion in household debt tied up in mortgages.

"This is a real risk, if not properly managed, and we get it", but added the figures needed context.

"While Australia's housing markets, especially in our largest cities, have experienced strong growth over the past decade this, of itself, is not evidence of an underlying weakness in housing asset values, nor that a hard landing for our housing markets is ahead," he said.

"Australian housing values, while high, are still real. 'Safe as houses' still broadly means something in Australia."

He noted the two occasions when we have seen considerable price pressures in homes in the last decade have both coincided with periods when the construction of new homes simply wasn't keeping up with population growth.

"In the last four years, supply has moved ahead of population to now build the strongest cumulative growth in stock in 25 years.

"This increase in stock is now working its way through the backlog, and there remains a strong pipeline going forward.

"In this year's Budget I announced additional measures to ensure supply keeps up with demand in the future, and am now working with our provincial Governments to improve the responsiveness and forward planning of the zoning and regulatory approvals system.

"This includes providing tax incentives for affordable housing investment, through managed investment trusts, that would be of real interest to US pension funds, providing a fifty percent withholding tax reduction from 30 per cent to 15 per cent for such investments, including development projects."

He noted as observed by Moody's in their credit report last month, when they once again maintained Australia's AAA credit rating, APRA's "proactive prudential policies bolster the resilience of the banking sector" and mitigate the risks of high household debt.

"And the proof, as always, is in the pudding."

Citing capital city house prices only rose 0.3 per cent in September to be 8.5 per cent higher through the year, he said APRA's measures, which have the full support of the government, are working to smooth the landing in our housing markets.

Morrison has visited New York and Washington for meetings at the IMF, the World Bank and of G20 Finance ministers.