Treasurer Scott Morrison says the chances of first home buyers getting into the property market have improved, as house price growth slows and a clampdown by regulators begins to bite.
While political debate was again dominated by the dual citizenship crisis last week, new data released by property group Corelogic revealed house prices in Sydney retreated for the second month in a row, this time by a moderate 0.5 per cent, while in Melbourne growth cooled from 0.9 per cent in September to 0.5 per cent in October.
For Sydney this was the first quarterly fall, by a total of 0.6 per cent, since May 2016, while prices in Melbourne grew by 1.9 per cent over the quarter. In the ACT, prices fell by on average 0.1 per cent for the month but grew by 1.1 per cent for the quarter.
National growth stood at zero for the month but 0.3 per cent up for the quarter, with Darwin and Perth trending down, Hobart booming and Adelaide flat.
Mr Morrison told Fairfax Media that careful steps taken by regulators including the Australian Prudential Regulation Authority and the Australian Securities and Investment Commission had taken some of the heat out of the housing market.
In December 2014, APRA announced a 10 per cent limit on investor lending, and in March this year it announced a 30 per cent limit on new, interest-only lending.
In April, ASIC announced it would examine whether lenders and mortgage brokers were inappropriately recommending more expensive, interest-only loans.
These steps, Mr Morrison said, had successfully - so far - cooled the market without smashing house prices.
And that's good news for first home buyers.
" I see hope for first home buyers in this recent data because what the actions of APRA have achieved is they have taken the edge off the market, they have meant that it has stopped it getting even harder to buy a first home," Mr Morrison told Fairfax Media.
"That doesn't mean everyone can suddenly buy whatever they want. It's still difficult to buy a first home."
The Treasurer also credited the NSW and Victorian governments, both of which have introduced policies that have discounted stamp duty for first home buyers, for having a positive effect.
He urged Labor and the crossbench to vote for his First Home Super Saver Scheme, which is designed to help first home buyers save by diverting more money into their super accounts and then draw on it to use as a deposit.
A cautious Treasurer, who has frequently argued that house prices must be pared back with a "scalpel", said: "So far this plan is working, but I am not making any claim beyond that.
"What is interesting is that even such a carefully calibrated measure on interest-only loans has had such a reaction in the market. Could you imagine what would happen if you got the chainsaw out? If Labor wipes out negative gearing and capital gains tax [breaks], there is no going back."
Mr Morrison's analysis of the impact of the APRA and ASIC measures is supported by CoreLogic's head of research, Tim Lawless, who wrote last week that "the slowdown in the pace of capital gains can be attributed primarily to tighter credit policies, which have fundamentally changed the landscape for borrowers".
"Interest-only borrowers and investors are facing premiums on their mortgage rates, which are likely to act as a disincentive, especially for investors who are generally facing low rental yields on investment properties."