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News Don't fret: RBA governor says property price falls were likely "manageable" Don't fret: RBA governor says property price falls were likely "manageable"

Don't fret: RBA governor says property price falls were likely "manageable"

Don't fret: RBA governor says property price falls were likely "manageable"
Staff reporterDecember 7, 2020

The Reserve Bank of Australia governor Philip Lowe has suggested the current decline in property prices was "manageable,."

Australia had gone through "plenty of periods" in the last two decades where house prices have declined.

"That's what happens in the housing market – we have these big run-ups, prices stabilise, sometimes they might fall, stabilise and then they'll rise again.

 "We are going through one of those events at the moment, particularly in Sydney and Melbourne."
 
The governor's outlook for property came in questions after delivering a speech yesterday.

“We are watching it carefully,” Dr Lowe told an Australian Industry Group lunch in Melbourne yesterday.

“At the moment it is manageable,” he added. “We had many, many years where we had credit growth rising faster than incomes.”

Dr Lowe said the Australian housing market was unlikely to face the same fate as the US housing market during the global ­financial crisis.

“Lending standards have been tightened quite a lot in the last four or five years,” Dr Lowe said.

“There has not been large extension of credit to people who shouldn’t have got it. It’s a very ­different situation in Australia (compared to the US). I don’t think it’s a fair comparison.

"We shouldn’t fret just because house prices aren’t rising at the same rate they used to.

“Houses in Sydney and Melbourne are still up 40 per cent compared to where they were at the start of 2014. You’ve got to have a longer term perspective.”

"As long as it's not a very large decline – it's manageable," Dr Lowe said.

Dr Lowe said Australians shouldn't necessarily expect house prices to continue rising at the rate they did recently, or worry if they come down "for a period".

"I think this is manageable. Remember, it wasn't that long ago that people were worrying about housing affordability. That was the number one political issue two years ago – house prices were rising too quickly."

"There's a lot of media coverage of house prices going down but I think you've got to have a longer term perspective."

Tags:
Price Correction
Rba/philip Lowe

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