National Australia Bank has highlighted the risk of an apartment glut in parts of inner Sydney and Melbourne, as a separate survey suggested hundreds of thousands of indebted Australians had no equity in their properties.
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Under questioning about the risks of a housing bubble at the government's banking inquiry, NAB chief executive Andrew Thorburn pointed to a tougher stance being taken by the bank in lending for new apartments, amid a surge in apartment construction.
While he denied property was overpriced, Mr Thorburn signalled the bank remained wary towards the apartment market in some inner-city areas, where it is requiring borrowers stump up a 40 per cent deposit.
The comments came as Roy Morgan Research on Thursday said 311,000 homeowners nationally had no equity in their properties, with mining states the most exposed.
Mr Thorburn said NAB was restricting loan-to-valuation ratios in areas with a large number of apartment developments to about 60 per cent, he said. The bank's chief operating officer Antony Cahill said: "Across Australia there are many places where [property] prices are going down. [Price increases are] clearly centred around Sydney and Melbourne."
With property prices falling sharply in some mining areas, separate figures on Thursday showed Western Australia and Queensland had the highest proportion of homeowners at risk of owing more than their homes are worth.
Western Australia, where the property market is falling due to the mining bust, had the highest proportion of borrowers with no equity in their home, at 9.2 per cent. Queensland had the next highest share, at 7.5 per cent.
NSW had the lowest proportion of borrowers with no equity in their home, at 5.1 per cent, while 6.3 per cent of Victorian homeowners were in this position.
The proportion of households nationally with no equity in their home has fallen from 7.7 per cent in 2012, probably as a result of the rise in house prices in recent years.
Even so, the data points to the risks created by the large amount of mortgage debt held by many Australians.
"With over 300,000 home borrowers having no real equity in their homes, this represents a considerable risk, particularly if home values fall or households are hit by unemployment," Roy Morgan's director of industry communications, Norman Morris, said.
With the number of units being built in Sydney running at record highs, the Reserve Bank had previously warned of the potential for an apartment oversupply in the biggest cities.
with Mario Christodoulou
