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Australia’s current monetary policy setting has not been constrained by the risk of an overheating property market, according to the central bank’s governor.
Governor Glenn Stevens told The Australian Financial Review that he is more concerned with improving dwelling construction than worried the market may overheat.
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“The view that I’ve held to this point is that we want more dwelling construction,” he said.
“I don’t think we were building enough for population reasons, and you would have to think that we needed to step that up…
“We want, as a society, to provide accommodation at a reasonable price for growth in the population and, of course, for macro-economic management reasons in the cycle it will be handy to have that source of demand growing not contracting in the next couple of years,” he said.
Continued growth in home values is welcomed in order to stimulate further construction of new dwellings, according to Mr Stevens.
“If you want the builders to step up, it’s a bit harder for them to do that when the value of the inventory is falling every day and it’s normal, I think – it’s reasonable, I think, to view some rise in prices – particularly a rise that reverses an earlier fall as part of the normal cyclical dynamic in the construction cycle,” he said.
