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Reserve Bank mired in uncertainty as rents rise

The Reserve Bank now admits that incomes growth in Australia may remain stubbornly stagnant for longer than expected despite recent robust jobs growth and lower unemployment rates. Reserve Bank Of Australia

This really should be no surprise to an increasingly mystified Bank as this conundrum has been challenging other similar developed economies for some time.

Full employment and competition for labour is failing to ignite wages growth as in previous cycles and the reluctant acknowledgement of this by policymakers reflects the shortfalls of near-sighted, rear-vision mirror economic policy determinations.

Things change – even economics.

But it is however refreshing to have the Bank focussing on the main macro-economic game and not the recent obsession with perceived risky imbalances in housing markets – which has predictably turned out to be a fairy tale.  

investor-enquiry-form

Concerns over low consumption by the Bank should also be no surprise with the recent experiment with macro-prudential policies through ARPA having again curtailed residential investor activity.

Fewer rental properties will continue to keep upward pressure on already high rents as confirmed recently by the ABS – more bad news for income-skinny household budgets.

And current record migration into Melbourne and Sydney will also place rental property demand at record levels.



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About

Dr Andrew Wilson, of www.MyHousingMarket.com.au is Australia’s leading property economist.


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