Australia's housing market continues to boom, with prices rising significantly across the country. Despite this, the Australian Prudential (LON:PRU) Regulation Authority (APRA) has expressed no immediate concern over the rapid increase in home lending.
On Wednesday, APRA disclosed its latest strategic agenda, which includes a major restructuring of its regulatory framework but steers clear of imposing new limits on investor lending.
APRA chair John Lonsdale reassured that the housing price surge — up 6.3% over the past year with substantial increases in capital cities — was not currently a regulatory concern.
Instead, he said APRA's focus remained steadfast on risk management within the financial sector, maintaining serviceability buffers at three percentage points above the reference rate to ensure banks prepared borrowers for potential increases in repayment rates.
The new corporate plan introduced by APRA aims to consolidate its banking and general insurance functions into a unified unit. This restructuring is expected to enhance the regulatory body's efficiency while maintaining robust supervision over the financial, superannuation and insurance sectors.
Despite historical interventions in 2014, when APRA capped investor lending growth amid rising house prices, the regulator currently sees no need for such measures. Investor lending has notably increased by 30.2% year-on-year, outpacing owner-occupier loans.
Lonsdale highlighted that high-risk lending practices, such as high debt-to-income and loan-to-valuation ratios, constituted only a minor fraction of new lending.
APRA does plan to revise its approach to managing various sectoral risks, including operational resilience and cyber threats, while supporting the ongoing implementation of the Financial Accountability Regime.
The agency will also elevate its oversight on climate risk reporting and is preparing to take on new responsibilities regulating the payments industry.