Endless Australian housing bubble discussion unproductive: RBA's Glenn Stevens
The Reserve Bank Governor Glenn Stevens says the RBA does not take a doctrinaire view of the ‘correct’ level of house prices.
"The endless discussion about whether or not the level of prices constitutes, at any one time, a ‘bubble’ is not very productive," he noted in his address to the Committee for Economic Development of Australia (CEDA) which was unusually insightful.
"We can observe that, for more than a decade, the level of prices relative to disposable income has been noticeably higher than it used to be, and not just in Australia.
"If that is a bubble, it is a remarkably long-lived and widespread one.
"But even if we lose no time arguing over that question, it is still the fact that prices go up AND down, and that these trends matter for the economy.
"If we are interested in strong and steady growth, we have an interest in dwelling prices and indeed all asset prices."
Offering a few observations on the topic of house prices, Glenn Stevens noted having fallen in late 2010 and 2011, dwelling prices have since risen, with the median price across the country up by around $100 000 – about 18% – since the low point.