Invest
RBA admits low interest rates will boost cost of housing
The RBA has confirmed that it is closely monitoring the impact of low interest rates on the level of housing loan commitments and acknowledged the “inherent” risk of soaring asset prices in the housing market.
RBA admits low interest rates will boost cost of housing
The RBA has confirmed that it is closely monitoring the impact of low interest rates on the level of housing loan commitments and acknowledged the “inherent” risk of soaring asset prices in the housing market.
The housing market has been touted for its resilience, the minutes from the RBA’s February board meeting revealed, with the bank acknowledging the market’s key role in the country’s economic recovery.
Noting that the market’s resilience has been better than expected, the RBA said: “Housing prices had recently been rising across most of Australia following an earlier period where conditions had been quite variable. This had returned the national housing price index to levels reached around four years earlier.”
But despite finding that house prices are soaring across the regions and some smaller capital cities, the bank acknowledged that there are few signs of deterioration in lending standards.
“Members noted that there were few signs of a deterioration in lending standards; however, lending standards would be monitored closely in the period ahead.”
The members did, however, concede that loan commitments had continued to pick up over preceding months.
“New housing loan commitments for owner-occupiers had increased to be well above the previous high in 2017. Investor housing loan commitments had also increased somewhat, but remained well below earlier peaks.”
The central bank also acknowledged the issues economists have been flagging for months, noting that cheap credit is linked to higher asset prices, particularly in the housing market.
However, the RBA board underlined “there were greater benefits for financial stability from a stronger economy”.
Earlier this month, RBA governor Phillip Lowe said the Reserve Bank is not responsible for targeting house prices, after questions were raised about the creation of a raging bull market against the backdrop of low interest rates.
The central bank has previously stated that low interest rates could see a 30 per cent increase in property prices over the next three years, with industry experts stating it will materialise over 75 per cent of Australian regions.
“With what we can see today based on recent shifts in inventory levels, we would be comfortable in saying the RBA forecast will apply in 75 per cent of regions,” self-proclaimed data nerds Arjun Paliwal and Kent Lardner told nestegg’s sister brand Smart Property Investment.
Cheap money to drive inequality
Housing experts and economists are concerned that the Treasury’s ongoing dependence on “cheap money” policy will further ratchet up house price and widen the gap between rich and poor.
A UNSW Future Centre study, commissioned by the Housing Productivity Research Consortium, found that 84 per cent of the surveyed 47 leading economists and 40 senior experts from government, industry and academia agreed that Australian governments have paid too little attention to how housing outcomes affect productivity and growth.
The research, led by honorary professor Duncan Maclennan, further found that 80 per cent of experts and economists see rising mortgage debt as a risk to the Australian economic stability.
About the author
About the author
Property
Poor wage growth could impede home price growth
With wages growth at record-low levels, a property expert has warned that continuing low and flat wages could impede home price growth. ...Read more
Property
Negotiating a lower interest rate on your property loan
The banks are customer hungry, meaning they’re willing to offer increased discounts to new customers and apply these discounts to existing customer loans, a mortgage broker has said. ...Read more
Property
How to determine the real value of a property
With various factors affecting market value and pricing, can one truly predict what buyers will pay for properties? ...Read more
Property
House prices tipped to soar 20% in 2 years: Westpac
House prices in Sydney are tipped to grow by 20 per cent over the next two years, and by 18 per cent in Melbourne, as a leading economist predicts strong economic growth following the rollout of the C...Read more
Property
5 tips to unearth the next property hotspots
A property expert has bullishly claimed that property hotspots are a “complete myth” that almost guarantees buyers will pay top dollar, and has instead urged buyers to seek out the “warm spots...Read more
Property
Top 10 inland rural towns to invest in
While it’s become apparent that regional housing markets have stolen the spotlight, having outpaced their capital city counterparts in 2020, new research has shown that inland rural towns have also ...Read more
Property
Where to buy under $300k
A positively geared property with high capital growth potential does not necessarily need to carry an astronomical price tag, an expert has said, with new market entrants able to land a home for under...Read more
Property
‘Great Australian dream’ of owning a home lives on amid COVID
Most Australian investors and home buyers were largely undeterred by the events of 2020, remaining eager to push through with their investment plans, a new survey has found. ...Read more
Property
Poor wage growth could impede home price growth
With wages growth at record-low levels, a property expert has warned that continuing low and flat wages could impede home price growth. ...Read more
Property
Negotiating a lower interest rate on your property loan
The banks are customer hungry, meaning they’re willing to offer increased discounts to new customers and apply these discounts to existing customer loans, a mortgage broker has said. ...Read more
Property
How to determine the real value of a property
With various factors affecting market value and pricing, can one truly predict what buyers will pay for properties? ...Read more
Property
House prices tipped to soar 20% in 2 years: Westpac
House prices in Sydney are tipped to grow by 20 per cent over the next two years, and by 18 per cent in Melbourne, as a leading economist predicts strong economic growth following the rollout of the C...Read more
Property
5 tips to unearth the next property hotspots
A property expert has bullishly claimed that property hotspots are a “complete myth” that almost guarantees buyers will pay top dollar, and has instead urged buyers to seek out the “warm spots...Read more
Property
Top 10 inland rural towns to invest in
While it’s become apparent that regional housing markets have stolen the spotlight, having outpaced their capital city counterparts in 2020, new research has shown that inland rural towns have also ...Read more
Property
Where to buy under $300k
A positively geared property with high capital growth potential does not necessarily need to carry an astronomical price tag, an expert has said, with new market entrants able to land a home for under...Read more
Property
‘Great Australian dream’ of owning a home lives on amid COVID
Most Australian investors and home buyers were largely undeterred by the events of 2020, remaining eager to push through with their investment plans, a new survey has found. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
