APRA forecast to ease regulation in 2018

Analysts expect the regulator to reverse some of its current macro-prudential measures in the coming year

APRA forecast to ease regulation in 2018



The Australian Prudential Regulation Authority (APRA) is expected to ease up on some of its macro-prudential measures next year.

A new report by Moody’s Analytics, Dangers Lurk Amid 2018’s Positive Outlook, claims that the regulator will move in response to recent changes made by the Reserve Bank of New Zealand (RBNZ).

“An interesting tidbit we have observed in recent years: Housing regulation in New Zealand tends to lead Australia's by at least a year,” Moody’s wrote.

With RBNZ recently easing certain prudential measures after softer house price growth, analysts predict that APRA may follow suit with some “minor reversals” next year.

Moody’s also expects that house price growth will keep decreasing throughout 2018 which will maintain pressure on dwelling investment.

“For instance, dwelling price growth in Sydney was 5% year-on-year in November, well down from its double-digit growth in 2016 and earlier in 2017.”

This trend has been the result of APRA’s policies which have increased borrowing costs for home buyers in the investment and interest-only space and also limited bank portfolio exposure to new mortgages, the analysts said.

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