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With the cash rate sitting at a record low of 2.0 per cent for the third consecutive month, Mr White said the issue of housing affordability in Sydney is one that must be addressed.
“I’ve long said the issue in Sydney is one of supply. Most other markets in Australia are significantly more subdued and in some cases going backwards,” he said.
“We don’t have a property price problem in Australia – what we have is a very strong market in Sydney. I think most people can agree that it is in no one’s interest for large numbers of Sydney families to be excluded from home ownership. The Sydney market is strong for Sydney factors, not financial market factors.”
Mr White said that while supply is the only long-term solution to the house price problem, a short-term measure needs to be put in place to play the role that raising rates used to.
“I favour some macroprudential measures to slow the housing market, as long as they are temporary and targeted,” he said.
Mr White added that APRA’s crackdown on investor lending is only suited to Sydney’s housing market, and large parts of Australia – particularly in Western Australia and South Australia – need more investors.
“Far from wanting to restrain investors, these states want to encourage them. The APRA move doesn’t help those markets – a better solution would have been to geographically target the intervention,” he said.