RBA: How investors juiced Australian house prices

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By Leith van Onselen

The Reserve Bank of Australia (RBA) has released its biannual Financial Stability Review (FSR), which has devoted an entire section to property investment.

Included in this section is the below chart, which shows the very strong correlation between the share of total housing finance commitments to investors and dwelling price growth, and suggests that Australian house prices are primarily driven by investors (speculators?):

ScreenHunter_4352 Sep. 24 12.01
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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.