Lack of housing supply to hurt affordability

Lack of housing supply to hurt affordability

by 0 comments

The Reserve Bank of Australia (RBA) has warned that rising house prices and interest rates could have a significant effect on affordability.

Speaking at the Committee for Economic Development of Australia’s housing forum yesterday, the RBA’s Tony Richards said supply was not keeping up with the increasing level of demand driven by the surging population.

“Mortgage rates are particularly low at present and, as the bank has noted on a number of occasions, it is not reasonable to expect that interest rates will stay at the current low levels indefinitely,” he said.

“When they do rise towards more normal levels, discussions on housing affordability will again focus more on the level of housing prices relative to incomes.”

Rising rates aside, Mr Richards warned that the growing population could also dampen affordability.

The average annual population growth has jumped from 240,000 per year to 340,000 per year – an increase of around 40 per cent.

“Yet the number of dwellings we have built has not risen. Commencements of new housing over the past five years have averaged around 150,000 dwellings, versus around 155,000 over the previous five-year period.

“ It would not be surprising if this was one factor that had contributed to the increase in the cost of housing over the past decade,” Mr Richards said.

The Reserve Bank of Australia (RBA) has warned that rising house prices and interest rates could have a significant effect on affordability.

Speaking at the Committee for Economic Development of Australia’s housing forum yesterday, the RBA’s Tony Richards said supply was not keeping up with the increasing level of demand driven by the surging population.

“Mortgage rates are particularly low at present and, as the bank has noted on a number of occasions, it is not reasonable to expect that interest rates will stay at the current low levels indefinitely,” he said.

“When they do rise towards more normal levels, discussions on housing affordability will again focus more on the level of housing prices relative to incomes.”

Rising rates aside, Mr Richards warned that the growing population could also dampen affordability.

The average annual population growth has jumped from 240,000 per year to 340,000 per year – an increase of around 40 per cent.

“Yet the number of dwellings we have built has not risen. Commencements of new housing over the past five years have averaged around 150,000 dwellings, versus around 155,000 over the previous five-year period.

“ It would not be surprising if this was one factor that had contributed to the increase in the cost of housing over the past decade,” Mr Richards said.

promoted content
Recommended by Spike Native Network
Listen to other installment of the Real Estate Business Podcast
reb top 100 agents 2016

With a combined sales volume of $13 billion in 2016, the Top 100 Agents ranking represents the very best sales agents in Australia. Find out what sets them apart and learn their secrets to success.

featured podcast

featured podcast
How this agent's commitment to clientele built him a 25k-strong client base

In this episode of Secrets of the Top 100 Agents, host Tim Nearly talks to RT Edgar’s Glen Coutinho who ranked number six in this year’...

View all podcasts

How difficult is it to maintain a good work/ life balance?

Very – if I’m having balance my competitors are working
Not – I schedule the time into my calendar in advance
A little – It’s scheduled, but something always crops up
Work/ life balance – what’s that?
Do you have an industry update?