By Alice Uribe
SYDNEY – The Commonwealth Bank of Australia expects parts of the Australian real estate market to slow down, as it sees some stabilization following an unexpected boom in prices and activity.
Chief Executive Officer Matt Comyn said mortgage lending activity could slow slightly amid Covid-19 closures in some Australian cities, including Sydney, as witnessed during the Melbourne shutdown last year.
“I think in any reasonable analysis, the very strong performance of the housing market has exceeded expectations over the last 12 or 15 months and a period of stabilization, and you would certainly expect to see a slowdown in some markets due to affordability constraints, ”he said. noted.
“We can already see that in some segments like early-market buyers. I think a decrease or certainly a reduction in these types of growth rates would be a good thing in terms of long-term sustainability and accessibility for people on the market. real estate market, ”he said.
In the release of its annual results on Wednesday, the CBA said its retail banking arm saw a 16% increase in net cash income to A $ 4.77 billion, against a backdrop of rising 33% of new home loans.
More broadly, the CBA, Australia’s largest bank by market value and the nation’s largest mortgage lender, said its net profit reached A $ 10.18 billion (US $ 7.48 billion) as of during the 12 months to June, up from A $ 9.63 billion a year earlier.
Mr Comyn said the CBA expects the economy to rebound strongly in 2022 once the current lockdowns are over, with a potential rebound in property markets hit by the restrictions, as was the case for Melbourne.
“Before the last foreclosure, our research shows that most customers are more confident about the future, more in control of their finances, saved more, spent less and paid off debts than a year ago,” said he declared.
Yet despite confidence in the quality of its housing portfolio and portfolio, Mr Comyn said the CBA recently raised the floor rate it uses for service to 5.25%, much higher than current interest rates.
“We are already testing whether our clients can repay their loans in a much higher interest rate environment. But I think these are the kind of practical steps that could be taken across the industry to gradually ease the real estate market. , if it was felt that it was increasing at too fast a rate, ”he said.
Australia’s real estate boom has been seen in most of the world’s developed markets, but it is “a good thing” now that some of the growth is faltering, Mr Comyn said.
Write to Alice Uribe at [email protected]