( ABC Central Coast: Sofie Wainwright)įundamentally, Dr Ellis explained, there is an inherent shortage of desirable land and people will pay whatever they can afford - generally how much they can borrow - to get the most suitable property in the best location. Only a limited amount of land exists in locations with great views, or close to amenities, transport and jobs. The mandarins last week are no longer available for sale because someone has eaten them, probably my children." 'All land is not created equal' "And the mandarins you buy this week are new mandarins and they're not the mandarins that you didn't buy last week. "You don't buy mandarins with a 25-year mortgage - accumulated interest is not a consideration when you're buying mandarins. The land underneath them is very important," she responded. When she appeared, it was apparent Dr Ellis had been listening to the previous questioning of APRA. "I didn't increase how much I spent for the mandarin just because I could afford to pay more, but I might have done that if there weren't enough mandarins in the store." I went and bought fruit on the weekend and I paid about 75 cents per mandarin - and I don't know if I got a good deal or not - but when I got to the counter I still had money left over. Does that not strike you as a bizarre take on how market economics works?" he asked a pair of somewhat bemused APRA officials.
"The Reserve Bank said one of the reasons prices have expanded is because people can afford to borrow more money. Mr Falinski, however, took issue with this theory, summing up in this analogy during the bank regulator APRA's evidence, immediately prior to the RBA's appearance. Unlike mandarins, houses do not grow on trees, with well-located land in short supply. It's a longer term trend I wrote about as far back as 20, even at the very beginning of the recent record-breaking home-building boom. "So, we do not have the ingredients of an obvious overall shortage of homes." "At the same time, the HomeBuilder subsidy and similar state-based grants have encouraged more home-building, and will for a while yet. Vacancy rates in the two largest cities rose further following the onset of the pandemic. With the international border closed, population growth dropped sharply.
"This led to higher vacancy rates in the largest capital cities. "In Australia, additions to the housing stock have run ahead of population growth for a number of years," Dr Ellis said in her opening statement. The debate arose because of the Reserve Bank's submission and previous evidence to the inquiry, repeated on Monday, that quashed the suggestion that bottlenecks in new housing supply - such as planning or zoning regulations - were the main culprits for Australia's spectacular property price boom since the late 1990s. The point of difference? Are houses like mandarins? Or, to translate the analogy, do the usual economic rules of supply and demand apply to housing, or are there other factors explaining price movements that don't exist for most everyday goods? No shortage of homes: RBA On the other was Luci Ellis, assistant governor (economic) at the Reserve Bank, who has been involved in much of the bank's housing research for three decades. On one side was the committee chair, Sydney-based Liberal MP Jason Falinski, who represents Mackellar, an electorate covering Sydney's upper northern beaches - some of the most expensive real estate in the nation. An at-times-testy debate took place at a committee hearing into why Australia has such unaffordable housing and what to do about it.
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