John McGrath says APRA credit controls preferable to New Zealand's new rules for property investors

APRA intervention and credit controls would be much preferred to what New Zealand has decided to do to calm their property market, following 20% house price gains in a yea, according to veteran Australian estate agent John McGrath. His comments came after the NZ Prime Minister, Jacinda Ardern has announced plans to remove tax deductibility on investment loan interest payments (except new builds) not just for future buyers but existing landlords, too. He noted macroprudential controls, whereby APRA instructs the banks to restrict credit, are far more likely in Australia. "They’ll probably restrict the number of new interest-only loans or reduce the debt-to-income ratio for new borrowers – things like that. "There are many levers they can pull. "But that’s a long way off, in my view. Sydney and Melbourne home prices are only just past their previous peaks and other capitals, particularly Perth, are enjoying a long-awaited catch-up on capital growth," he noted. "This is actually helpful to the economy because of the psychological ‘wealth effect’ that rising home values creates. "People feel richer and spend more at the shops, which creates jobs. "Plus, when (not if) stock levels increase, the market might settle down on its own. "Let me tell you, APRA intervention and credit controls would be much preferred to what New Zealand has decided to do to calm their property market," McGrath said.