The Senate Economics References Committee has scrutinised Australia’s financial regulatory framework and its impacts on homeownership through an inquiry and report. It sought to identify the effects that the current framework has on homeownership, with the findings largely focusing on first-time homeownership.
The terms of reference placed focus on scrutinising the financial, regulatory, and market factors influencing Australia's housing sector. This included the role of APRA's prudential standards and their role in lending practices, and the nature of debt and equity in housing developments. It considered the involvement of corporate and institutional funds in housing provision, the existing mechanisms that monitor residential property investment, and the tax treatment of housing and its effects on demand and prices. Additionally, the Committee evaluated the adequacy of metrics for tracking new housing supply against population growth, explored mechanisms to support aspiring homeowners without compromising financial stability, and sought to address issues impacting housing affordability and market dynamics.
The Chair’s foreword indicates that the inquiry into lending laws and regulations highlights the challenges first-home buyers face in Australia, emphasising how existing prudential standards, such as APRA's three per cent mortgage serviceability buffer and mortgage credit risk weightings, disproportionately disadvantage this group. With many locked out of the market or reliant on parental support, the "Bank of Mum and Dad” has become a significant lender, exacerbating existing inequities in housing access. The report criticises the government for neglecting lending policies in favour of a corporate and bureaucratic housing agenda and calls for urgent reforms to recalibrate lending frameworks. By implementing the recommendations of the inquiry and boosting Australia’s housing supply, an additional 50,000 Australians could achieve homeownership.
In the report, the Committee provides a series of recommendations with a central focus on improving first-home buyer access to the housing market. These include amending the Australian Prudential Regulation Authority Act to establish additional scrutiny and oversight by the Parliamentary Joint Committee on Corporations and Financial Services, incorporating the promotion of first-home ownership into APRA's objectives, and requiring APRA to consider the impact of its prudential standards on first-home buyers. The Committee also proposes a new Statement of Expectations for APRA to account for the long-term benefits of homeownership, as well as guidelines for lower serviceability buffers and more flexible capital risk weightings for first-home buyers. It further recommends consulting with Approved Deposit-taking Institutions on options to modernise the Banking Code of Practice to support co-ownership lending scenarios. These measures aim to balance APRA’s prudential standards with the long-term benefits of widespread homeownership.
Find the link to the report here.