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Supply and demand both influencing affordability: RBA

Staff Reporter 1 minute read

Increasing demand and constrained supply are fuelling Australia’s excessively high house prices, according to the RBA's head of economic analysis Anthony Richards.

Speaking in Melbourne yesterday, Mr Richards said that the demand for property was causing house prices to increase in inner city suburbs, while supply issues were putting pressure on prices in outer suburbs.

While conceding that the government could do little to improve affordability in the short-term, he suggested policies addressing affordability should address supply and demand.

“On the demand side it is now widely accepted that policies that simply give people more money to spend on housing are likely to be capitalised into higher housing prices,” Mr Richards said.

“On the supply side, efforts to improve housing affordability should be focused on policies regarding land use and on improving efficiency in the supply of land and housing.”

Published: 28-03-08

Supply and demand both influencing affordability: RBA
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