Transcript of Question & Answer Session The Outlook for the Housing Market

Thank you, Alex for all of that. There was a lot of information there, but on the whole it still looks positive, which will encourage us greatly down here. Now Alex has kindly offered to take any questions, if anyone has any question they'd like to ask, please raise your hand and there are microphones.

Thanks Alex. You touched very briefly there on the issue of availability of finance and that's obviously key for the development industry because it drives the whole industry. On the ground, we're starting to see some ramifications from the Banking Royal Commission and bankers changing their lending criteria. Is the RBA seeing any of that or tracking that and have any expectations of what impact that might have on the economy and the housing market?

There's clearly been quite a few regulatory changes for example and the banks themselves have been looking at their risk management practices and their lending practices and the decisions are basically around tightening lending standards when it comes to lending for housing. That's been particularly focussed on investor housing and interest-only loans. So to the extent that that affects the marginal borrower and the amount that the marginal borrower can borrow, that will have an effect on demand for housing. So we do pay a lot of attention to these developments.

There are two aspects to that: one is what are the consequences of that for credit growth and therefore, demand for housing and the real economic side of things. In that respect we have done quite a lot of work trying to understand how many people might be affected by these changes and the question ultimately comes down to … that is a supply side effect but there is also demand side effects happening at the same time. So it's always a little bit difficult to tease apart which of the factors is most important at any point in time.

I think the other aspect of it that's really important to bear in mind is that we also have responsibilities for financial stability and from that perspective it's really important that lending practices are appropriate, that banks are doing a good job of managing the risks that they face because ultimately that's going to be what underpins the strength of the financial system and the ability of it to support growth going forward.

So I think there's sort of two aspects that we pay a lot of attention to and try to understand.