A senior executive at Reserve Bank of Australia (RBA) is concerned that Brisbane’s oversupply of apartments could hurt investors.
Michele Bullock, the Assistant Governor (Financial System) at RBA, said the glut of apartments has already caused price and rents to fall in Brisbane, and that this would likely continue.
“The current stock is due to increase by 25 percent in the next two years. That’s an awful lot of apartments to come into Brisbane,” Bullock said at an Australian Shareholders’ Association meeting in Sydney last Thursday. “What you’re already seeing in fact, is rents and prices declining. So we’re a little bit concerned this supply is going to cause issues.”
The RBA had previously sounded the alarm about Melbourne, but Bullock said that the concerns were being offset by the fast growth in the population there.
ANZ bank and Queensland bank Suncorp have reportedly imposed tougher regulations on loans in parts of Brisbane’s CBD.
Bullock believes that Brisbane’s market is unlikely to hurt the banks but may harm investors.
“Provided they’ve got good enough security, I think the banks will be fine, they’re well capitalised. From a financial stability perspective, one of the things we are also concerned about though is the human aspect. If prices start to decline, they might cause some concerns and hardship for people,” she said.
Source: The Sydney Morning Herald