Did Macquarie just put another nail in the coffin of Australian house prices?

Macquarie Group Ltd (ASX:MQG) may just have made it a bit harder for Australian house prices to recover in the shorter-term.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

sdf

Macquarie Group Ltd (ASX: MQG) may have just put another nail in the coffin for Australian house prices.

We have been covering the goings on with Australian house prices every month for quite a while now. The last few months has seen an acceleration of house price falls, with Melbourne and Sydney house prices showing declines of more than 1% a month.

Some people lay the blame at the hands of the major banks of Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB).

The size of the falls may be the fault of the big banks, but I still think house prices would be falling even without the effects of the Royal Commission.

Foreign buyers have been pushed largely out of the market by higher government fees, more scrutiny and capital transfer limits by the Chinese government.

There has long been a prediction of apartment oversupply because of excessive construction. We are still going through this with more apartments being finished.

A very large amount of interest-only loans are expiring and switching to principal and interest repayments. This is believed to increase borrower repayments by around 30% a month, which may be unaffordable for some.

Today, the AFR is reporting that Macquarie is ending its 'Bank of Mum and Dad' financing and borrowing for self-managed super fund property investments. Family loan guarantees are no longer offered as of yesterday and lending to SMSFs for residential property will end by the end of April.

Macquarie said that technological and operational complexity of its white label business and the new regulations from the Royal Commission led the bank to make the decision to leave that segment.

Foolish takeaway

I think it's probably a good move by Macquarie because the property market is heading downwards and this could raise the risk of bad debts for Macquarie.

Macquarie seems like a well-run ship with very competent management making good decisions to me, although now may not be the best time to buy its shares.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Bank Shares

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.
Bank Shares

This is the ASX bank stock with the largest dividend yield right now

Looking to ASX bank stocks for dividend income right now?

Read more »

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Bank Shares

ASX banking sector: Is it time to consider a regional bank?

The big 4 banks are widely considered to be overvalued.

Read more »

A person leans over to whisper a secret to a colleague during a meeting.
Bank Shares

Here are the latest growth forecasts for the CBA share price

Can the bank continue rising? Here are some expert views.

Read more »

A businessman presents a company annual report in front of a group seated at a table
Bank Shares

Earnings season predictions: Macquarie weighs in on the big 4 banks

What are the broker's predictions?

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Bank Shares

Major CBA investor reveals why he's all in

This investor described one major reason driving his investment in CBA shares.

Read more »

Young investor sits at desk looking happy after discovering Westpac's dividend reinvestment plan
Bank Shares

Invested $10,000 in Westpac shares 2 years ago? Guess how much you've already banked!

Atop their regular dividend payments, Westpac shares have enjoyed a strong two-year run.

Read more »

Woman calculating dividends on calculator and working on a laptop.
Bank Shares

Buying CBA stock today? Here's the dividend yield you'll get

CBA's yield right now might surprise you.

Read more »

A financial expert or broker looks worried as he checks out a graph showing market volatility.
Bank Shares

How much would the ASX 200 fall if CBA shares returned to 'fair value'?

CBA shares account for 12% of the ASX 200.

Read more »