While New Zealand’s National Government undertakes bold reforms to improve housing affordability and dwelling construction by removing supply-side bottlenecks, Australia’s new Coalition Government seems intent on ignoring the issue altogether, today supporting higher house prices and the “wealth effect” it bestows on home owners. From the AFR:
Treasurer Joe Hockey told reporters in Canberra that he was not worried about a housing bubble and rising prices should help generate new construction.
“The most important point at this stage is that there is confidence back in the real estate market in Australia,” Mr Hockey said.
“Rising house prices actually help to make marginal property development viable. And there is a shortage of supply out there and what this will do is make supply more readily available.”
Mr Abbott also welcomed rising property prices.
“Don’t forget … if housing prices go up, sure that makes it harder to get into the market, but it also means that everyone who is in the market has a more valuable asset,” he said…
“I would be confident that the Reserve has got its eye on housing prices and will appropriately manage the level of interest rates.”
So once again, instead of tackling the structural issues stifling housing supply and worsening housing affordability, the Federal Government is washing its hands of the problem and defering responsibility for housing policy to the RBA via interest rates.
The RBA would do well to put the ball back into the government’s court by following the RBNZ’s lead of publicly warning on the need for structural housing reform, as well as implementing macro-prudential curbs to high risk mortgage lending. This way, Australia’s various levels of government would be forced to do their job and undertake necessary housing policy reform, rather than ducking the issue.
