Governor of the Reserve Bank of Australia Philip Lowe speaking on Household Debt, Housing Prices and Resilience
- Says high cost of housing a "real issue" for many Australians, can have serious side effects
- Says ratios of housing prices and debt to household income increasing as wages growth slow
- Says low interest rates have acted as a "financial amplifier" pushing home prices higher
- Concerned about impact of sharp house price correction on household spending, economy
- Higher the indebtedness the greater is the sensitivity of spending to shocks to income
- When rate cycle turns, higher debt levels will likely make spending more responsive to higher rates than previously
- Recent increase in household debt to income has made economy less resilient to future shocks
- Over time we could expect interest rates to rise in Australia
- We should not expect interest rates always to be this low
- Australian banks are resilient, soundly capitalised
- Higher housing supply, transport infrastructure to help balance supply-demand
- Employment growth has been a bit stronger of late, forward looking indicators positive
- Want to see continuation of positive employment trends
- Expect economic growth to pick up gradually, average around 3 pct or so over next few years
Headlines from the speech via Reuters
The full text is worth checking out, plenty of grpahs in there to highlight Lowe's concerns.
Like this one:
