Stop using the 'B' word: RBA assistant governor urges against bubble talk

by Mackenzie McCarty19 Sep 2013

RBA assistant governor, Dr Malcolm Edey, has spoken out against claims that Australia is facing a housing bubble at a conference in Sydney.

While he admits that house prices have risen, Australian Financial Review reports show Edey urging economists and those in the property industry to remain level-headed.

“House prices have risen at a rate similar or level to growth in household income…The ratio has been roughly flat or tending actually to fall. Within that trend, there will be cycles and periods where that ratio rises or falls,” he says.

“But we shouldn’t be rushing to reach for the bubble terminology every time house prices are above average because you will be unrealistically alarmist.”

Edey says the country is currently experiencing a low rate environment and that one of the effects is a stimulation in housing demand.

“We are seeing that influence in the housing sector and that’s not surprising because it’s an interest rate sensitive sector,” he says.

Edey also pointed to comments in the RBA’s most recent meeting minutes, which addressed rising house prices.

“We…indicated this is an area to watch but we do need to keep it into perspective.”


  • by Andrew Gardner 19/09/2013 9:24:29 AM

    Well put Dr Edey, at last, someone gets it. Steve Keen ought to read and understand along with a host of others keenly seeking the lime light via alarmist, uninformed nonsense. Keen must have predicted the last ten property crashes we NEVER HAD!!!