‘Last week, the Australian Bureau of Statistics released data showing a significant decline in building approvals, following the recent interest rate rises. Without the additional housing stock urgently needed to address Australia’s housing shortage, not only will home loan affordability suffer, but we can expect to see rental affordability reach new lows.
‘Housing is a key driver in inflationary growth. The conundrum is that higher interest rates to address inflation will also push up the cost of housing, thus increasing the inflationary problem.
‘The Federal Government must target inflation through fiscal measures in next week’s Budget. Downward pressure is needed on interest rates if Australia is to have enough homes, and particularly affordable homes, for both buyers and renters.
‘Lenders also have to play their part with more rigorous lending practices, to ensure that those borrowing have the capacity to repay their loans, and are not creating negative equity in homes used as collateral for other household borrowings.
‘Consumers must also carefully factor in potential rate rises and shifting house prices in their financial planning for home purchases and investments,’ says Noel Dyett.