The Reserve Bank has made it clear that monetary policy is being conducted with an eye on employment, not on the equity consequences of rising house prices.
The Reserve Bank says all levels of government will have to tackle equity issues arising from surging house prices.
In a major speech on Thursday night, Reserve Bank (RBA) Deputy Governor Guy Debelle made it clear the central bank will not intervene to curb or control house prices — and made the telling point that there was a trade off between a housing boom — which we have now — and employment that met questions of equity in other ways.
Concern about house prices is rising as investors replace first home buyers in a booming housing market, taking advantage of low interest rates and taxpayer subsidies via negative gearing. The recent increase in housing affordability fueled by near-zero interest rates and a brief dip in house prices is now going into reverse after the end of the HomeBuilder package.
Read more about the RBA’s approach to housing prices…
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