Cracking down on housing
The RBA is becoming wary of an ‘ugly monster’ they created through record-low interest rates and the promise that they wouldn’t be raised until 2024. In the first 9 months of this year, the Home Value Index rose by a whopping 17.3% and by 22.5% from a year earlier.
In his September statement, the RBA governor Philip Lowe explained that due to the current rising house prices, and low interest rates, the Reserve Bank is closely monitoring housing borrowing and has stressed the importance that lending standards are maintained.
In addition, on the 24th of September, Australia’s Council of Financial Regulators held a quarterly meeting to discuss the housing market risks. Their media release stated that “The council is mindful that a period of credit growth materially outpacing growth in household income would add to the medium-term risks facing the economy, notwithstanding that lending standards remain sound.”
There is no doubt that the housing market is the main driving factor of the national economy and is perhaps why the government has not intervened during the slow economic production the pandemic has created. Now more than ever, good sound advice is needed to navigate the potential rough seas that may lay ahead of Australia’s housing economy.
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