Don’t Worry, Treasurer Says Weak House Prices Are A Good Thing
Treasurer Josh Frydenberg says house prices are returning to a more sustainable level
So supposedly there is nothing safer than houses. Houses are safer than lifeboats and seatbelts combined.
But right now, they don’t feel so safe; recent data shows house prices have fallen for 12 months straight.
Well according to Treasurer Josh Frydenberg, we have nothing to worry about. According to Frydenberg weaker house prices in Sydney and Melbourne are "healthy for the economy".
"What we have seen is the prices come back to a more sustainable level," Mr Frydenberg told reporters in Sydney on Tuesday. "This is what the Reserve Bank had wanted."
CoreLogic data released on Monday showed softer house prices in Australia's two biggest capitals have continued to drag down the national market.
Prices dropped by 0.5 per cent nationally in September, marking 12 months of falls.
Mr Frydenberg said such falls are what the Australian Prudential Regulation Authority had intended when it tightened investor loans.
Looking ahead, he said the coalition will need to be careful when implementing the recommendations of the banking royal commission to ensure Australians can continue to access credit in a way that doesn't harm the economy.
But the treasurer said Labor's plans to remove negative gearing would be "destructive" to people's house prices, and drive up rents.
Opposition MP Brendan O'Connor said the plans, which Labor took to the last election, are still needed to ensure housing affordability.
"We will see falls and rises in the housing market, but the fact is we need to have sensible policy," he told Sky News on Tuesday.
"What we need to do is to provide opportunities for home-buyers, often who are on reasonable incomes, not being able to compete against speculators who get tax breaks to buy their tenth investment home."
Featured Image credit: AAP/Dan Himbrechts