Login
iscover
Reserve Bank of Australia (RBA) governor Philip Lowe has reiterated the bank’s stance on a property boom, stating that it holds no responsibility for house price targets.
In an address to the House of Representatives standing committee on economics last week, Dr Lowe said: “As we have previously discussed at these hearings, the RBA does not — and should not — target housing prices.
“Instead, our focus is on the lending that is used to purchase housing.
“We want to see lending standards remain strong.”
Following questioning around when the RBA would act to prevent “unsustainable prices”, Dr Lowe said the issue for the central bank would still focus on people not borrowing sensibly.
“We shouldn’t try and control asset prices… What we can have influence on is how much borrowing happens on the back of those rising prices.”
He added that the RBA would be concerned if there was a deterioration of the borrowing standards, “but there are few signs of this at the moment”.
“If that were to change, you could expect that we would be discussing possible responses at the Council of Financial Regulators (CFR), as we did a few years ago, and that was successful.”
The CFR is a co-ordination body for the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC), the Reserve Bank of Australia (RBA) and the Treasury.
Despite the stance, Dr Lowe did make a number of observations about Australia’s housing market, conceding that “there are many moving parts here at the moment”.
Those moving parts include record-low interest rates, a new preference towards detached houses and regional locations, first-home-buyer government incentives, and the “slowest population growth in a century” due to border closures.
The above have coincided with high rates of house building and a considerable decline in apartment rents across Sydney and Melbourne.
He said: “In the face of all these moving parts, the housing market has been more resilient than we expected and this has been helpful for the overall economy.”
According to the governor, “the past year would have been even more complicated if there had been large, ongoing widespread falls in housing prices”.
Even with current house price rises, the national housing index is “only around the level that it reached four years ago”.
The governor’s comments come after the RBA’s decision last week to maintain the current cash rate at the historically low level of 0.1 of a percentage point.
ABOUT THE AUTHOR
Grace Ormsby
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.
You are not authorised to post comments.
Comments will undergo moderation before they get published.