Australia’s regulators are preparing to intervene in the property market as house prices explode by as much as $1,000 per day

Front pathway leading to an old Victorian-style house with lush green landscaping
A home in the Australian state of Victoria. The average home price in New South Wales, its neighbor to the north, has reached $1 million (AUD) for the first time.

Regulators are preparing to stage a possible intervention into the risks posed by surging Australian house prices and household debt.

Month on month in 2021, lending increased to record-breaking levels, with $1 billion now flowing into the property sector every single day. The enormous growth has been enough to push the average New South Wales home to break the $1 million (AUD) mark for the first time, and some homebuyers have witnessed prices shooting up $1,000 per day.

Speaking on Thursday, the Reserve Bank of Australia (RBA) expressed alarm at the pace of new lending as buyers try desperately to keep up with the hot market.

“I don’t think it’s in the country’s interests to have an extended period where credit growth is running way ahead of growth in our incomes, particularly given the high levels of debt,” Governor Philip Lowe said as part of a public address on Thursday.

“We’re not at the point where we’re actively considering implementing any initiatives in this area, but we’re doing the preparation for what might happen, what we might do if credit growth was accelerating.”

It’s the strongest indication yet the RBA has given it would intercede if pressed by Australia’s seemingly insatiable appetite for property.

The Council of Financial Regulators (CFR) released its quarterly statement on the same day, raising concern there had been “signs of some increased risk taking” in a low interest rate environment.

New Zealand has already set a template

Earlier this year, New Zealand announced a major crackdown after prices rose 20% nationally during 2020.

This week the Ardern government agreed “in principle” to apply debt-to-income (DTI) limits, further restricting the amount Kiwis can borrow. While the government wants to remove investors from the market and curtail any impact to first homebuyers, its central bank described the limits as likely “the most effective additional tool” to tackle the market, on top of existing restrictions which include up to 40% deposits.

Any intervention would likely see lending standards lifted with a particular focus on investors.

A property bubble Australia can’t afford

The Australian property market is valued at $8.1 trillion (AUD) and responsible for the majority of the nation’s wealth.

This week calls were made for a Royal Commission to tackle what experts consider to be a runaway market. Meanwhile, government policies marketed as affordability measures have been criticized by economists as exactly the policies help inflate demand and drive more buyers into the market, posing further risks.

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‘We will be proceeding with the Code’: As Facebook bans Australian news, the government says it won’t back down on new media laws

Mark Zuckerberg
Facebook CEO Mark Zuckerberg.

  • The Australian government says it won’t back down on its proposed news media bargaining code.
  • Communications Minister Paul Fletcher told ABC News Breakfast “we will be proceeding with the code.”
  • The laws, if passed, could compel Facebook and Google to pay Australian news outlets for the journalism they produce.
  • Visit Business Insider Australia’s homepage for more stories.

The Australian federal government says it won’t back down on legislation that could force Facebook to pay for news content shared on the platform after the social media juggernaut banned Australian users from sharing news links on Thursday morning.

In a seismic development for the local media, Facebook said it will restrict Australian news organisations from sharing links to their journalism.

Local users are now barred from accessing international news links through the social media platform, while overseas users will also be unable to view content posted to Facebook by Australian publishers.

The decision to ban Australian reporting from Facebook comes in response to the news media bargaining code, which could compel the platform and search engine giant Google to pay news outlets for the Australian journalism they display.

The Australian federal government says the legislation addresses a power imbalance between local publishers and online giants, which now control a huge proportion of the multi-billion dollar digital ad market.

Google has pre-empted the legislation by signing individual commercial deals with a number of Australian news organisations, including Nine, the owner of Business Insider Australia.

But Facebook says the proposed rules are unworkable.

The legislation “left us facing a stark choice: attempt to comply with a law that ignores the realities of this relationship, or stop allowing news content on our services in Australia,” said William Easton, Facebook’s managing director for Australia & New Zealand.

“With a heavy heart, we are choosing the latter.”

Australian news organisations, many of which reach large local audiences through Facebook, are reeling at the development.

The removal of Australian news from Facebook has also raised fears that misinformation and dubious reports could fill the gap left by local outlets.

However, Communications Minister Paul Fletcher today said the government had no intentions of withdrawing its legislation, which yesterday passed in the Lower House.

“Firstly, we will be proceeding with the code,” Fletcher told ABC News Breakfast.

“We want Google and Facebook to stay in Australia but we have been very clear that if you do business in Australia, you need to comply with the laws passed by the elected parliament of this nation.”

Fletcher said the legislation addresses important competition and media policy issues that are “an important part of our democratic process.

“It may not seem so important in Silicon Valley but it is very important to the Australian Government and Australian people.”

Federal Treasurer Josh Frydenberg struck a somewhat ore conciliatory tone, confirming he had a “constructive” discussion with Facebook CEO Mark Zuckerberg early Thursday morning in which the multi-billionaire raised “a few remaining issues” with the legislation.

 

“We agreed to continue our conversation to try to find a pathway forward,” Frydenberg said.

The proposed legislation will now head to the Senate, where it is expected to pass into law.

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