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Australian Home Prices Are Separated From Reality – And RBA Wants You To Know It’s Not Responsible | Greg Jericho

NSIn the madness of soaring house prices, the head of the Reserve Bank has been well criticized. With the latest data showing that house prices are rising faster than ever, the head of the Reserve Bank has put the federal and state governments directly responsible.

In case you need more evidence that the Australian housing market is cut off from reality Statistics Bureau Show that you live in Sydney and became pregnant last September. By the time you gave birth, the median home in Sydney had risen almost $ 240,000. Overall home real estate prices rose nearly 7% in the June quarter across Australia, breaking the previous record of 5.5% set in 2009.

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In Sydney and Canberra, real estate prices have risen 19% over the past year. It rose 15% in Melbourne and 13% in the slowest growing Darwin.

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Price increases have definitely been driven by housing.

In all capitals except Hobart, the prices of established homes have risen well beyond the prices of apartments. Still, with an average increase of 9%, apartments aren’t exactly down.

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But when you notice that Sydney’s home prices have risen a quarter in a year, it’s clear that the market is completely cut off from the reality of income.

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And it’s not just Sydney. Home prices across Australia are record or near record prices. The median home price in Canberra is the second highest at $ 920,000, well below the median home price in Sydney of $ 1.19 million.

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And we haven’t peaked – even the blockage may only temporarily stop the increase.

This rise Was completely predictable When analyzing mortgage growth. Home finance has grown tremendously by 83% over the past year.

And wherever mortgages go, home prices continue:

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Home prices don’t rise by 80% in a year because the links aren’t one-to-one, but if relationships are maintained, they could rise by just over 30% by the end of the year.

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By December, Melbourne’s prices could rise by more than 40% annually, as Melbourne is actually more relevant than other cities.

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It was insane and one was enough to take responsibility.

Governor on Tuesday Reserve Bank Philip Rowe gave a speech He rejected suggestions from some “analysts,” saying the RBA “may raise cash rates to cool the real estate market.”

Rowe was clear, “I want to make it clear that this is not our agenda.”

He argued that not only lower house prices, but also lower employment and lower wage growth due to higher interest rates were “insufficient trade-offs in the current situation.”

But he also slapped a bit to those who blamed the RBA’s soaring prices.

“Society-wide concerns about home price levels are best addressed by rising interest rates and curbing lending,” he said.

Instead, he cited aspects such as “designing our tax and social security systems.” That includes negative gearing, stamp duty, and exclusion of family homes from retirement asset testing. He also said, “Planning and zoning restrictions. The type of dwelling to be built. And the nature of our transportation network.”

He concludes that these are “clearly outside the territory of monetary policy and central banks.”

In effect, he said he would complain to the federal and state governments if he really wanted to do something about home prices.

Of course, as we saw in the last election, the problem is that efforts to curb tax incentives are portrayed as attacks on retirees. But the more serious problem is that the recent home price boom highlights one indisputable fact. The government has announced that it will strengthen the housing market even in the worst case.

Obviously, the housing market is not a “free market” of invisible hand prices, but is heavily influenced by government intervention.

Home prices don’t always rise, but what happened at GFC last year shows that the government will do everything it can to prevent the housing market from collapsing.

The evidence makes real estate look like a fairly safe investment, and as governments push up the demand side of the market with subsidies and tax cuts, it encourages higher prices than ever before.

Of course, despite the government’s best wishes, all markets can fall, and Rowe wants you to know that he is not responsible.

But for now, the only sign is the higher price.

Australian Home Prices Are Separated From Reality – And RBA Wants You To Know It’s Not Responsible | Greg Jericho

Source link Australian Home Prices Are Separated From Reality – And RBA Wants You To Know It’s Not Responsible | Greg Jericho

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