Experts concerned Treasury’s dependence on ‘cheap money’ will ratchet up house prices
Housing experts and economists are concerned that the Treasury’s ongoing dependence on “cheap money” policy will further ratchet up house price and widen the gap between rich and poor.
Housing experts and economists have hit out at the government over its perceived lack of attention in regard to the impacts the housing system poses to economic productivity and growth.
A UNSW Future Centre study, commissioned by the Housing Productivity Research Consortium, found that 84 per cent of the surveyed 47 leading economists and 40 senior experts from government, industry and academia agreed that Australian governments have paid too little attention to how housing outcomes affect productivity and growth.
The research, led by honorary professor Duncan Maclennan, further found that 80 per cent of experts and economists see rising mortgage debt as a risk to the Australian economic stability.
Addressing the findings, Professor Bill Randolph of UNSW City Futures Research Centre, said the study highlighted worries about over-reliance on ultra-low interest rates for housing, employment and productivity.
“The vast bulk of housing experts and economists surveyed are concerned that ongoing Treasury dependence on ‘cheap money’ policy will further ratchet up house prices and widen the gap between rich and poor,” Professor Randolph said.
“From a purely economic perspective, the informed expert view is that this will undermine productivity and economic growth.”
According to the research, among the best ways to broaden Australia’s economic recovery strategy would be a large-scale national social housing program, with almost seven in 10 respondents agreeing that “stimulating housing is best achieved through social/affordable housing investment rather than private market”.
Only one in 10 agreed that in its 2020 budget, the federal government “rightly” resisted calls for inclusion of social housing investment in its recovery stimulus package.
Everybody’s Home, a national advocacy campaign to end homelessness, said a powerful social and economic dividend was available if the Commonwealth chose to invest in social and affordable housing.
“A $7 billion investment in social and affordable housing would unlock more than $18 billion in economic expansion, creating more than 18,000 jobs a year over four years, and making a serious dent in homelessness,” said Kate Colvin, national spokesperson for Everybody’s Home.
“Longer term, this would also boost productivity, by allowing people better access to jobs. Social housing can lift people out of poverty and put them on a path to prosperity.
“A better-balanced housing system is the right thing to do. It also happens to be the smart thing to do.”
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