From the CEO

Yesterday the Australian Prudential Regulation Authority (APRA) increased the minimum interest rate buffer for banks to use when assessing serviceability of home loans. The modest increase from 2.5 percentage points to 3.0 percentage points above the loan product rate is an early response by the regulator to prevent homeowners from biting off more than they can chew as we are getting comfortable with record low interest rates.

Here in Perth, we are all too aware of the scars of negative equity so the move should be cautiously welcomed as a reasonable approach to prevent this kind of pain from occurring again. The key impact of this decision for us is on the investor market, which has been on life support for some time. With investors typically borrowing at higher levels of leverage and generally having other existing debts that the buffer also applies to, this is just another disincentive likely to keep property investors in their WA cave.

The announcement comes after the news from CoreLogic that Australian housing values are over 20% higher over the last 12 months, with the growth rate at the fastest pace in 30 years. For Perth, 18% growth over the year is unsurprising given the tight established and rental market. This is with closed borders holding back the tide of migration which is hotly anticipated to spike when we finally open up to the country and the world.

Housing supply is a hot topic, and UDIA WA have an exclusive luncheon event with the three Cabinet Ministers responsible for addressing this critical issue on Friday 12 November. With hundreds of tickets already sold, I suggest you get your table now – this conversation is one you won’t want to miss.

Local government elections

Ordinary local government elections are taking place on Saturday 16 October, a two yearly opportunity to shape the voice of local government.

The State Government has been running the ‘Be a Vocal Local’ campaign in partnership with the WA Local Government Association, Local Government Professionals WA and WAEC, encouraging Western Australians to play an active role in the elections.

UDIA WA believes that local governments play a critical role in the planning and development process and it is important that local councils represent a broad base of the local community.

More information here

Rates hold at historic low

Australia’s official cash rate will remain on hold at the record-low level of 0.1 per cent following the Reserve Bank of Australia’s (RBA) monthly meeting on Tuesday.

The RBA has kept the interest rate on hold despite criticism that historically low rates are potentially “supercharging” the property market.

In his monetary statement, RBA Governor Philip Lowe noted rising property prices but maintained that inflation was not yet high enough to justify a rise in interest rates.

“Housing prices are continuing to rise, although turnover in some markets has declined following the virus outbreak,” Mr Lowe said.

“Housing credit growth has picked up due to stronger demand for credit by both owner-occupiers and investors. The Council of Financial Regulators has been discussing the medium-term risks to macroeconomic stability of rapid credit growth at a time of historically low interest rates.

“In this environment, it is important that lending standards are maintained and that loan serviceability buffers are appropriate.”

Despite the RBA’s move to continue to hold the cash rate, several experts think it is likely that the ‘Big Four’ banks will lift their standard lending rates out of cycle within the next 12 months.

Review of WA Environmental Offsets

The Department of Water and Environmental Regulation (DWER) has reviewed the effectiveness of the environmental offsets framework in WA and its implementation in delivering its objectives. The review focused on environmental assessment and compliance processes as they relate to environmental offsets and the implementation of offset conditions.

The review report made 25 recommendations for improvements and the implementation plan outlines the objectives, deliverables, timing, and roles and responsibilities for a series of projects designed to implement review recommendations.

Further consultation will also occur during project planning and implementation. This includes targeted consultation with key stakeholders and public consultations on significant reforms.

More information, including opportunities for further consultation, is available here.

Global Supply Chain constraints

Western Power recently provided a presentation on global supply constraints and how it impacts their customers which UDIA WA Director of Policy and Research Chris Green attended.

Global supply chains remain fractured by heavy port congestion, vessel delays and shipping container shortages. In addition, the Aviation Industry is experiencing a collapse in air cargo capacity. These scenarios are universally delaying cargo onboarding, progression, transit and completion, resulting in many Western Power supply chains experiencing continued disruptions. The impact of Covid on Eastern States workforces is currently compounding these issues.

The primary impact on Western Power is that made to order items and replenishment of stock items are impacted, current indicative lead times from placement of requisition are extended, and managing material availability is becoming challenging.

Western Power has established a number of processes and solutions to assist in addressing these issues including early ordering for long lead items; at application consultation, or planning stage for external sales, an Early Undertakings Contract can be entered into; and costs will be reconciled with the formation of the formal quote / access contract.

Owner Occupier loan commitments fall

The value of new loan commitments for housing fell 4.3 per cent in August 2021 (seasonally adjusted), driven by a 6.6 per cent fall in new owner-occupier loan commitments, according to statistics released today by the Australian Bureau of Statistics (ABS).

ABS head of Finance and Wealth, Katherine Keenan, said: “The value of new loan commitments for owner-occupier housing saw the largest fall since May 2020. Despite this fall, the value of loan commitments was 34 per cent higher compared to a year ago and 53 per cent higher than pre-COVID levels in February 2020.”

Not surprisingly, the largest falls in the value of owner-occupier commitments were in states and territories with greater lockdown restrictions. New South Wales fell 9.6 per cent, Victoria fell 4.9 per cent and the Australian Capital Territory fell 11.0 per cent. Smaller falls were seen in Western Australia, Tasmania and the Northern Territory, while Queensland rose 2.0 per cent and South Australia rose 1.8 per cent.

The number of new loan commitments to owner-occupier first home buyers saw its’ seventh consecutive fall, falling 3.0 per cent in August 2021 (seasonally adjusted). The number of loan commitments fell 2.1 per cent compared to August 2020, recording the first through-the-year decline in two years.

More here.

Don’t miss your chance to lead your industry

Nominations close next Friday 15 October for the UDIA WA 2022-23 Standing Advisory Groups and Other Committees.

Standing Advisory Groups were endorsed in 2021 as part of a revised governance structure, and will serve to bring together technical experts from the UDIA membership to offer detailed operational level input into the objectives covered under the three Strategic Committees, which are the Economic, Environment and Liveability Committees.

UDIA WA is calling for leaders from across the industry, from a diverse range of skills and backgrounds, to come forwards and nominate for a number of positions and play a role in shaping the future of development in Western Australia. Positions are available in the following Strategic Working Groups and Committees:

Standing Advisory Groups:

  • Built Form
  • Climate Change
  • Community Education & Engagement
  • Industry Workforce
  • Infrastructure
  • Land Use Planning
  • Regulation & Taxation
  • Urban Water

Other Committees:

  • Diversity
  • Outlook

For more information, access the nominations kit here and to nominate, click here.

Upcoming submissions

UDIA WA are working on a variety of submissions, which members are encouraged to submit feedback on to ensure your voice is heard on the respective matters.

We are seeking feedback on the following submissions:

  • NCC 2022 public comment draft (Stage 2): Proposed amendments to energy efficiency and condensation technical provisions (available here; submissions close 17 October 2021)
  • DWER Consultation: Discussion paper and draft EP (Cost Recovery) Regulations 2021 (available here; submissions close 22 October 2021)
  • DWER Consultation draft: Native Vegetation Policy for WA (available here; submissions close 25 October 2021)
  • Draft SPP 2.9 Planning for Water and Planning for Water Guidelines (available here; submissions close 15 November 2021)

To have your say on any of the above, email