REGIONAL NSW could stand to lose investment with recent changes to lending, according to a senior finance lecturer.
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Dr John A Anderson, an academic at the University of New England, said increases to minimum deposits and interest rates for investor loans was like “taking a shotgun when a scalpel was needed” to help deal with “overheated property markets in Sydney and Melbourne”.
“There isn’t a single property market,” Dr Anderson said.
“South Tamworth is very different to Mosman.”
Dr Anderson said lenders have been instructed by the Australian Prudential Regulation Authority (APRA) to dramatically tighten lending to investors with some lenders decreasing maximum loan-to valuation rate to 70 per cent from 80 per cent, increasing deposit required from 20 per cent to 30 percent, and interest rates up 0.3 per cent.
He said the move tarred property markets in communities around Australia with the same brush.
“You can’t treat them the same, some need slowing, while others need huge investment, and the stimulus that goes with it,” he said.
The senior lecturer said it could affect rental markets too, with investors “forced to retreat from providing housing for tenants in regional areas looking to either see if they like the town, or if it’s worth switching from high capital city rents”.
Dr Anderson said the “policy setting was wrong” and suggested a system adopted across the ditch was a better way forward.
“In New Zealand, property prices in Auckland and Christchurch were a problem,” he said.
“So they made it harder to borrow for investments in those cities and kept it more open for other areas.
“We should follow the Kiwi model.”
The lecturer hopes to meet with local MP Barnaby Joyce and raise the issue.
“My message to Mr Joyce will be, you need to get together with other non-Sydney and Melbourne MPs and ask how effective is this in Bundaberg, Warwick, Darwin and Tamworth,” Dr Anderson said.
“Barnaby was bang on the money saying people should consider moving to the bush.
“But the changes are slowing everything down.”
APRA announced new lending guidance in 2014 and in order to meet the requirements laid out, some institutions have introduced measures such as minimum deposits.
APRA flagged it would focus on areas of “prudential concern” including higher-risk mortgage lending and strong growth in in lending to property investors.