[RBA Governor Philip Lowe] now understands that escalating rents are emerging as one of his most serious inflationary forces and there is no hope in sight of stabilising those rent increases because state governments and local councils have policies designed to push up the cost of houses.
And the banks forced on the building industry fixed price contracts which are destroying the capacity of the industry at a huge rate, by sending builders broke and causing would-be home buyers not to order new houses, fearing their builder will collapse midway through the building of their house.
As well as pushing up the cost of houses and apartments, governments in states like Queensland and Victoria have actively discouraged people from buying dwellings to rent by giving tenants far too much power.
Regularly the Greens get enormous publicity every time they mention that there should be a freeze on rents and negative gearing should be abandoned, which further discourages people from buying dwellings to rent.
At the same time as constricting the supply of rental accommodation, we are bringing in vast numbers of new migrants.
What’s happening is that throughout the community there are a series of agendas being embraced by governments councils and banks that have the side effect of boosting inflation and putting Reserve Bank governor Philip Lowe into what looks like an almost impossible corner.
Our bureaucrats pursue policies that raise house prices (especially the prices of their houses) by (a) throttling the supply of houses with regulations, while (b) juicing the supply of money with anti-market low interest rates.
Meanwhile the bureaucrats in charge of setting the most important price in the economy — the price of overnight money, aka “interest rates” — are bumbling back and forth trying to do better than a market would. And failing.
Our ruling class are to blame more generally, above all, by ignoring the general will of the population as expressed in every poll on the matter — but never put to an election — for much less immigration.
So our birth rate plummets because young people despair of ever owning a house. It used to be so easy 50 years ago, but now is impossible for most. Nowadays most people are working to pay mortgages that are so high because they are locked into a vicious competition for too few houses, so they borrow many years worth of wages at artificially low interest rates. I mean, it’s not as if Australia doesn’t have room for more houses, millions of the things. Only Antarctica has more room.