RBA comments belie housing alarmists

The Property Council of Australia has welcomed today’s statement by the Governor of the Reserve Bank on interest rates, saying it marks an appropriately sober assessment of housing markets.

The Governor said in his statement:

          “Conditions in the housing market vary considerably around the country. In some markets, conditions have strengthened further and prices are rising briskly. In other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Growth in rents is the slowest for a couple of decades. Borrowing for housing has picked up a little, with stronger demand by investors. With leverage increasing, supervisory measures have strengthened lending standards and some lenders are taking a more cautious attitude to lending in certain segments.”

Ken Morrison, Chief Executive of the Property Council of Australia said the Bank’s statement reflects what we know in the industry.

“We are witnessing prudent lending practices and the best environment for renters in a generation with consistent low rental growth.

“The deterioration in housing affordability is a serious problem in a number of our major cities, but is not an Australia-wide problem. As the Governor points out, the market varies considerably across the country. The differences can be attributed to differences in state economic trajectories as well as new dwelling supply.

“The Bank’s comments are a stark contrast with the sometimes alarmist claims about the state of the housing market, particularly the level of investor activity.

“We’ve seen too much misdiagnosis of housing affordability problems, with often questionable cures prescribed.

“It is important that commentators and policy makers take a clear-eyed view of the issue of housing affordability.  Especially in Sydney, we see price increases which are a direct result of long-term supply issues combined with ongoing population growth.

“Importantly, investors are adding to supply – and this is contributing to the most stable rental markets in decades. Changes in government policy for investors have the potential to put this stable rental market at risk.”

Media contact:  Paul Ritchie |  E pritchie@propertycouncil.com.au