APRA Warns Albanese On House Prices

With further steep rate rises likely, and a number of over-leveraged households on the brnk of financial distress, property prices will fall according to the Autralian Prudential Regulation Authority’s briefing to the Federal government.

In its May brief, the agency that monitors the health of the banking system warned of a rapid shift in the economic outlook.

“Inflationary pressures and increases in interest rates will increase the cost of finance for business and housing,” the briefing said.

“More broadly, frequent natural disasters, increasing geopolitical tensions and cyber threats, and the lingering impact of COVID-19 are creating volatility in financial markets, increasing cost pressures for all industries and heightening risks in the financial system.”

The briefing also spoke of risks in the nation’s now $10 trillion housing market and said households had become increasingly leveraged due to years of historically low-interest rates.

The brief went on the describe the housing markets as “cyclical”, with interest rate increases placing vulnerable households in financial distress.

“The faster-than-expected emergence of inflationary pressures and a rising interest rate environment is likely to place some strain on household balance sheets and place a number of households in financial distress.”

Further, the body suggested the rate rise will impact housing prices stating: “More generally, high interest rates will reduce borrowing capacity, increasing the likelihood of a decline in Australian housing prices”.

However, the document was optimistic in its assessment of the Australian economy’s ability to handle the stress of both inflation and rising interest rates and is keen to closely monitor the lending standards ongoing.

”APRA will continue to actively monitor lending standards and evolving risks in housing markets and review its macroprudential response in consultation with [Council of Financial Regulators] agencies.”

The idea of wallpaper elicits so much apprehension in homeowners, New York designer Francis Toumbakaris purposely uses the term “wallcovering” when speaking to clients about it. Yet decorating websites and media accounts teem with instances of the stuff. “It transforms a room and gives it personality,” said Casey Keasler, founder of design studio Casework, in Portland, Ore.

So what keeps folks from hanging the gorgeous material, and how do homeowners get over these wallpaper willies? Here, some case studies of conversions.

Hangup: It’s too pricey.

Budget concerns can hamstring homeowners. Home-services company Angi estimates that wallpaper can cost as much as $12 a square foot for labor and materials, while painting tops out at $6. “If the wall surface needs work beforehand, prices go up,” said Bethany Adams, an interior designer in Louisville, Ky. And Keasler notes that paper can cost as much as $400 a roll.

Antidote: Baby steps

New York designer Tara McCauley says homeowners can get more hang for their buck by using paper strategically. In an apartment in Brooklyn whose homeowners sweated the bottom line, she coated only the hallway with a dark-blue pattern inspired by Portuguese tiles. “It added so much impact,” McCauley said of the modest use. The designer adds that another way to save money is by hanging what she calls the gateway drug to wallpaper: patternless grass cloth. With no need to align a motif, the material goes up quickly and costs less to install, she says, “but it adds visual depth in a way plain paint never could.”

Hangup: I’ll get sick of it

A fear of commitment stops many would-be wall paperers, who worry about having a change of heart later. Erik Perez, a design publicist with his own firm in Los Angeles, campaigned hard for what he thought was the perfect old-Hollywood look for his and his husband’s dining room—a maximalist, leafy green wallpaper made famous by the mid-20th-century decoration of the Beverly Hills Hotel. His husband, Paul Hardoin, a voice-over actor, resisted. “Is it going to go out of style? Will I tire of it? Will it affect resale value?” he worried.

Erik Perez, right, and his husband, Paul Hardoin, in their Los Angeles dining room, clad in CW Stockwell’s Martinique paper. Photo: Julie Goldstone for WSJ

Antidote: Low-use spaces

Infrequently used rooms can carry a bold choice long-term. Of the Brooklyn hallway she wrapped in blue, McCauley noted, “It’s a pass-through, so you don’t get overwhelmed by a bold pattern.” Ditto powder and dining rooms, like that of Perez, who said, “We only used that room when we were entertaining and it was too cold to be outside.”

It took three years, but Hardoin caved when the banana-leaf pattern became available in blue. “I thought it looked cool,” Hardoin said. He took the leap, knowing his sister Annette Moran (a wallpaper enthusiast) would be their DIY installer. “Now it’s the happiest room in the house,” he said.

Hangup: It’s dated

When Sarah and Nate Simon bought a historic home in Louisville, Ky., the walls sported oppressively dark patterns, including big, repeating medallions set in a grid. Sarah recalls thinking, “ ‘Not this! What’s the opposite of this?’ In my mind that would be paint.” Even for folks who haven’t pulled down awful examples, “the word ‘wallpaper’ can take them back to flowery patterns of the ’50s and ’60s that feel very dated,” said Toumbakaris.

Antidote: Modernity

“Wallpaper does not mean what it used to. It can be meandering, abstract, ombre or sisal,” said Simon’s interior designer, Bethany Adams. She suggested a sophisticated Chinoiserie that New York designer Miles Redd, in a collaboration with Schumacher, updated with an aqua colorway. Adams explains that like most Chinoiseries, this pattern doesn’t repeat for more than 8 feet. “You get a peripatetic design that keeps the eye engaged,” she said. “It’s looser.” Said Simon of her dining room today, “It’s a complete transformation, like art on my walls.”

Stereotypes of fusty florals and pitiless patterns fall away when designers present homeowners with contemporary picks. Still, sometimes the conversion takes time. One of Keasler’s clients, gun-shy after removing old paper, came back a year later, ready. “We chose a clean classic style that was graphic and minimal for a modern edge in the bathroom,” said the designer.