Graph 16  In short, it is difficult not to conclude that the financing of the property sector became overextended during the boom years, and that a period of adjustment was largely unavoidable. In saying this, I don’t want to downplay the difficulties that some firms are now experiencing as that adjustment takes place, or the impact it is having on property development.
The Reserve Bank is very much aware of both these issues. But cycles like the one we are going through seem to be endemic to the property sector and raise the question of whether, over the longer term, the financing model of the sector should shift towards more equity and less debt.