RBA Warns of High House Prices

Australia’s central bank has admitted that booming house prices are worsening the inequality gap.

Before a parliamentary committee’s inquiry on housing affordability on Monday, the RBA confessed that low income Australians would be forcibly pushed into poverty if buying a property becomes increasingly unaffordable.

The comments made by RBA assistant governor Luci Ellis come on the background of surging land and property values, which have increased open deposit costs in obtaining a property mortgage.

“If you own your own home at the point you retire that’s basically the thing you need to do to not be in poverty in retirement,” Dr. Ellis said.

The RBA and the Australian Prudential Regulation Authority both stated loan serviceability remained stable, but the deposit requirements were becoming a challenge for buyers.

The RBA may not move on the footsteps of other global central banks in decelerating cheap money, despite acknowledging that booming house prices fueled by record low interest rates are hurting home buyers.