RBA: Investors are Inflating House Prices

There is “no disputing” housing is expensive, says the Reserve Bank of Australia’s head of financial stability, but loosening lending standards to help first home buyers enter the property market would be “counterproductive”.  RBA head of financial stability Luci Ellis said today it was helpful — from a stability point of view — that there had been no push to improve the position of first home buyers by easing lending standards.

“As recent experiences in other countries have shown, such a step would probably be counterproductive in the longer run,” Dr Ellis told a House of Representatives standing committee on home ownership today.  Dr Ellis’ comments come after a sharp rise in investor activity in Australia’s capital cities, which has prompted concerns of a speculative property bubble in Sydney and Melbourne, which was partly blamed on the RBA’s own stance on monetary policy.

“Investor interest in property has been especially strong in recent years, no doubt partly encouraged by low interest rates and the prospect of (concessionally taxed) capital gains,” Dr Ellis said.  The resulting house price surge has “probably priced some aspiring first home buyers from properties they could otherwise acquire”, she said.

Australian

Stuart McPhee
Stuart McPhee

Australian private trader for nearly 20 years, author, trading coach, licensed adviser and regular speaker at major trading events all around the world. Graduate of RMC Duntroon and former Australian Army Officer.