The Reserve Bank of Australia governor told the Parliamentary House Economics Committee there is a “very significant issue of intergenerational equity at work” in the housing market.
“Historically, it has always been the case that the first-time entry into the market is a struggle. It was for me and everyone here,” he said.
“I think perhaps it is a bit more daunting now because the size of the deposit you need to accumulate is larger. That is why we see many families actually helping their children and transferring the wealth through the generations that way.”
Mr Stevens said the solution to the affordability problem has to come from more supply of appropriately configured and located land, and the transport infrastructure to connect it.
“That has to be the answer,” he said. “The answer isn't going to be government programs that give you money. That money just ends up in the hands of the sellers.
“The answer has to come from the supply side of the market. In a country with this much land, something is wrong if we can’t do the marginal cost of housing a bit cheaper.”
The Australian mortgage market is currently in a state of flux as lenders and borrowers adjust to two-tiered pricing, higher serviceability requirements and changes to loan-to-value rations.
In his statement, Mr Stevens clarified what exactly the regulatory measures are designed to do.
“Cognisant of the risk that very low interest rates may foster a worrying debt build-up, regulatory initiatives are in place to maintain sound lending standards and capital adequacy,” he said.
“I hasten to add that the objective of such tools is not to control dwelling prices, but to contain leverage. The evidence is emerging that they are doing their job.”