Low Supply to Bring Price Rises: RBA

Posted on 22/10/2019  
Low Supply to Bring Price Rises: RBA

The Reserve Bank has warned that a slowdown in construction will lead to a housing shortage – which, in turn, will result in rising house prices.

Data from the ABS shows that residential construction, which includes houses, higher-density units and alterations, has fallen in the last 12 months, with higher-density building approvals being back to 2012 levels.

The RBA expects a further decline in the number of dwelling starts in 2020, with potentially negative impacts on the Australian economy.

But rising buyer demand in an environment of low building activity will put pressure on property prices.

“Demand is still continuing to increase given population growth,” says Guy Debelle, deputy governor of the RBA.

“Prices have turned in Melbourne and Sydney (though not in Perth or Darwin), which probably brings the investor back into the market

“The growth in demand without a meaningful supply response will lead to a larger price response.”

« Back