Rising House Prices Only “Hurt Vulnerable”

ABC.net.au

A senior Reserve Bank official says rising house prices do not actually benefit most owners, and tend to transfer wealth from the poor to the rich.

The RBA's head of economic analysis, Tony Richards, says it is good that Australia seems to have escaped the large house price falls that destabilised many other advanced economies such as the US and UK, but that rapid price rises might be similarly destructive.

"Looking forward, the risk is that we might move towards undesirably strong growth in Australian housing prices," he told a CEDA forum on housing affordability.

"When they do rise towards more normal levels, discussions on housing affordability will again focus more on the level of housing prices relative to incomes."

Mr Richards also emphasised the disproportionate impact that house prices rising faster than incomes had on lower income households.

"Lower-income households are less likely to own housing, either their own home or an investment property, than higher-income ones," he said.
For full article click here