RBA Governor, Glenn Stevens, continues to provide mixed messages on whether he believes Australian housing is unaffordable.
In March last year, Mr Stevens lamented the fact that the high cost of housing in Sydney is making it increasingly difficult for his children to afford their own home:
THE man who dictates official interest rates fears the current property boom will make it near impossible for his own kids to buy a home…
“I’ve got kids that within not too many more years are going to want somewhere of their own to live, and you wonder how’s that going to be afforded because these prices are getting quite high,” he told Channel 7…
Then in March this year, Mr Stevens seemingly contradicted his earlier view when he remarked at a question and answer session that he was not “terribly troubled” about the level of house prices in Australia and that prices were “not exceptional by global standards”:
“There is quite often quoted very high ratios of price to income for Australia, but I think if you get the broadest measures country-wide prices and country-wide measure of income, the ratio is about four and half and it has not moved much either way for ten years.
“That is higher than it used to be but it is actually not exceptional by global standards.”
Now Mr Stevens appears to have returned to his earlier stance, noting at Friday’s parliamentary committee that young Australians are being adversely affected by high housing prices, whilst correctly acknowledging the role of supply constraints in making housing more expensive:
Baby boomers are stealing the futures of their children and grandchildren through high house prices that have stopped young people buying their own part of Australia, Reserve Bank governor Glenn Stevens has warned…
Though acknowledging interest rates were a major factor in housing affordability, the governor said he could not understand why a country as big as Australia seemingly had a shortage of land.
“How is it that we can’t add to the dwelling stock for the marginal new entrant more cheaply than we seem to be able to do,” he asked. Addressing a parliamentary committee, Mr Stevens said key State and local government issues around supply, zoning, transportation and infrastructure seemed to be making a simple block of land more expensive than was necessary.
Baby boomers and Gen Xers that had benefited from the lift in home prices in the early parts of this decade were now sitting on huge capital gains.
“There’s a very big inequality between generations building up and I think that’s a social problem as much as any economic point,” he said.
I guess two out of three ain’t bad…
