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First home buyers should wait for better market conditions rather than taxing their finances to get in now, according to the RBA.
The Reserve Bank of Australia's head of financial security, Luci Ellis, told a housing conference last week that the current market favoured investors, while first home buyers probably felt “squeezed out”.
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“It is still probably quite disheartening for potential first home buyers. As such, it would not be a good outcome if they responded by overstretching themselves to try to get into the market during upswings,” she said.
Ms Ellis told the conference that lenders should also be wary of making finance too readily available.
“As well as being against first home buyers' own long-run interests, that would increase risk in the financial system,” she said.
“I am hopeful that, over time, Australia's urban structure can evolve to offer better choices and greater financial stability.
“This might require some changes to the way we plan, build, and live, as well as ongoing prudence in how we borrow,” Ms Ellis said.
