A new Reserve Bank paper has found house price rises have been driven much more by interest rate cuts
New research from the Reserve Bank of Australia has revealed the extent of the impact interest rate cuts have had on house prices, rents and dwelling investment. The research suggests that without the rate cuts housing affordability would have remain largely unchanged after 2011. It found that rate cuts have far outweighed the impact of higher population growth, although the situation is reversed when it comes to rental prices.
At the end of 2011, the economy was struggling: annual employment growth had slowed from 2.6% in 2010 to just 1%. The unemployment rate was rising, and the volume of private sector residential dwelling construction had fallen 8% from the previous year.
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