In the recent RBA statement Reserve Bank deputy governor Ric Battellino dampened expectations of a rate cut next week, but at the same time smacked-down the property pessimists saying…
“Also part of the problem is that people mismeasure the ratio of house prices to income. The most common measure that people do is they measure the ratio of prices in Australian cities to average income across the whole country and, of course, that ratio looks quite high because incomes in the cities – or incomes in the country are much lower than incomes in the cities. If you do the calculation properly and measure the ratio of house prices in the cities to the incomes in the cities, it’s fine. House prices in the country relative to country incomes are all fine. So I don’t think there’s a problem there to deal with.
At the moment, the housing market is sort of drifting slightly lower. Auction clearance rates are broadly consistent with, you know, stable or slightly falling house prices. I think we’ve all got used to a situation where, you know, we regard house price rises as being the norm. That is not necessarily the norm and, you know, over the long run, house prices broadly have to move with income.”
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