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Monday, 20 February 2017

RBA remarks on housing

Luci Ellis on housing

It's fascinating to get a glimpse inside of the mind of Luci Ellis, once head of Financial Stability and possibly a Reserve Bank of Australia (RBA) Governor of the future.

There's surely no need for me to rehash her speech in full here. 

A couple of interesting points to look at briefly here, though.

Firstly, although there is a lot of mortgage debt around in Australia: "...we say that most of the mortgage debt in Australia has been borrowed by those most able to service it".


A valid point, though I also believe that household debt levels are stretched for many lower income earners, a factor also acknowledged by the Reserve Bank rhetoric in the speech.  

And secondly, the RBA noted that the big decline in home ownership for 25 to 34 year old age group happened years ago, and therefore is not related to recent price gains. 

In fact, home ownership rates in this cohort even appear to be gradually rising in the RBA's chart.


This second piece of analysis is arguably bonus, since it relies upon figures from as long ago as the 2011 Census.

I believe the most recent Census - assuming everyone filled out their surveys given the website challenges! - will show home ownership rates dropping in Sydney, if perhaps not so much elsewhere. 

I discussed both of these points in more detail during the recent Devils & Details podcast with Business Insider here

Still, an enlightening speech!

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