No fast fixes for Housing Affordability Conundrum
Market analyst, Catherine Cashmore, recently wrote a review of the housing market, and her perspective on the economic factors that have underpinned house prices to date.
She speculated on how such policies as negative gearing, the first home owners grant, and reductions to interest rates have impacted property investment and home buyer affordability.
Cashmore quoted from a report published in The Economist that the property market in Australia is ‘overvalued’, and that a lot of local and offshore analysts predicting a fall in property prices at some point in the ‘post mining’ future.
To add further perplexity to the conundrum of future house prices and affordability, Cashmore pointed out the Reserve Bank of Australia (RBA)’s own recent presentation, titled “Housing and Mortgage Markets: The Long Run, the Short Run and the Uncertainty in Between,” has not eliminated the possibility of a downturn in housing at some point in the future.
In presenting the issues, Cashmore wrote that the RBA outlined its own uncertainty regarding future housing affordability outcomes, and acknowledged that predicting an outcome is not assured as it depends on how the point was arrived at in the first place.