intend to lift the interest rates in order to tackle the situaion, with the central bank governor Philip Lowe pointing out that it is not the role of monetary policy to target house prices. “Ever-rising housing prices relative to income, I don’t think serves our collective good very well, it’s something that as a citizen I would like to see addressed, but as a central bank we can’t do anything about,” he noted.
According to experts, one of the major contributors to this rapid growth in house prices is the Official Cash Rate (OCR), currently sitting at a record-low 0.1 per cent. Nevertheless, Dr Lowe noted that despite the presumptions in the financial markets, this rate will not be lifted until inflation comfortably reaches a figure between 2 and 3 per cent and wages grow at an annual pace of 3 per cent at least, conditions which he say will not be met before 2024.
“While monetary policy is contributing to higher housing prices at the moment, the way to address these concerns is through the structural factors that influence the value of the land upon which our dwellings are built,” the central bank governor added.
