Federal Treasurer Scott Morrison maintains ahead of Tuesday’s budget that apartment prices have peaked.

In a classic “crisis? What crisis?” series of pre-budget comments, he maintains lending controls driven by banking regulator APRA have dampened demand by local investors and foreign buyers.

He says further controls, such as cutting negative gearing or capital gains tax breaks would risk crashing a market that is already slowing. 

In other words, don’t expect action anytime soon on housing affordability.

Perhaps the Treasurer didn’t read the Australian Financial Review’s story last week saying record numbers of Australian households are facing mortgage stress.

As interest rates rise on those large loans, affluent post codes could see as many as 1,000 households a week face defaults in the next 12 months, according to the paper.

Digital Finance Analytics says the number of borrowers in “severe distress” has increased by about a third.

The nation’s largest mortgage insurer, Genworth Mortgage Insurance, also said some home buyers are scraping together deposits with credit card debt, parental loans and other forms of risky “unsecured debt”.

The company revealed a sharp spike in loan defaults over the March quarter, with the company’s loss ratio jumping from 27 per cent to 35 per cent year-on-year , adding to concerns that mortgage stress was rising.

And investment bank CITI says Australia’s housing prices could fall by as much as 7 per cent next year – which would make those families with big mortgages cry all the way to the bank.

According to the Sydney Morning Herald, housing affordability savings of more than $2500 a month are needed to get young families to a 20 per cent deposit, with home buyers needing to accrue $88,250 for a home worth under $450,000.

For those saving a deposit ‘‘it’s never been harder’’, First Home Buyers of Australia co-founder Daniel Cohen was quoted as saying by the paper.

And the budget’s silver lining?

One commentator speculated the government may announce first-home buyers would be able to withdraw money from superannuation for a deposit.

But, according to The Sydney Morning Herald, on the condition they put it back later and save more quickly for deposits by having their pay directed into superannuation-like accounts.

We’ll have to wait and see.

Meanwhile, at least someone has something to smile about in all this housing mayhem.

The combined profits of Australia’s big four banks likely exceeded $15 billion in the first half, as lenders started to benefit from a round of late 2016 interest rate hikes and home loan growth.

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