Lenders overreacted on property development 06 November 2009 5:24PM Ian Rogers The clamp of finance to property developers may be overdone, the governor of the Reserve Bank of Australia, Glenn Stevens, suggested in a speech last night. Stevens was speaking at the 2009 Economic and Social Outlook Conference hosted by The Melbourne Institute and The Australian. Reminding his audience of the pick up in Australia's rate of population growth (the highest since the 1960s), including the rise in immigration, he stressed the addition to demand, including that for housing, that will most likely follow. "Adequate financial resources will of course also be needed," Stevens said. "In that regard, the current issue is not the cost of borrowing for end buyers, which remains low, but the availability and terms of credit for developers. "Perceptions by lenders of the riskiness of development in some cases are probably overdone just at the moment, given the strength of the underlying fundamentals on the demand side for accommodation." Stevens said that this "will probably not be a permanent problem, though", going on to note "the more persistent difficulties look like they may be in the areas of land supply, zoning and approval." A separate debate is beginning to find its feet on that context, one in which even the RBA appears to discount the theory that taxes (such as charges on developers for local infrastructure), like subsidies, are reflected in the price of land.