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We had a chance to fix the housing crisis. The moment's now passed

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In time, we will look back at this election and think: “That was the moment.”

That was the moment when, amid plunging property prices, we decided what kind of a nation we truly wanted to be.

Illustration: Matt DavidsonCredit:

The moment we acted to protect the Great Australian Dream: namely, our collective commitment to leveraging heavily into property ownership, working our guts out to service the debt and voting collectively for policies to protect any windfall gains.

The moment we eschewed a policy platform to rein in generous tax breaks which inflate demand for housing – pushing it out of reach of many – and instead elected as our Prime Minister a former employee of the Property Council of Australia.

The aftermath of the federal election has seen a lurching change in the prospects for Australian property prices.

On top of the defeat of Labor’s proposed changes, the banking regulator on Tuesday announced that it will relax the stress test lenders must apply to potential borrowers.

Instead of testing borrowers' capacity to service repayments at a 7 per cent interest rate, the regulator would like lenders to stress-test borrowers at an interest rate 2.5 percentage points above the prevailing mortgage rate, currently about 4 per cent.

The move recognises that interest rates have headed substantially lower than when the rule was first introduced in 2014.


© The Age