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James Mitchell
Heavy government participation in the Australian housing market is pushing up prices and creating volatility, The International Monetary Fund has warned.
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Australia has the most government participation in the housing market out of all advanced economies, according to The IMF 2011 Global Financial Stability Report.
“While the aim of government participation is generally to provide affordable housing and promote homeownership, it might also constrain competition in the financial sector, which in turn might widen interest rate spreads and limit the range of available mortgage products,” the report read.
The first homebuyer’s grant, subsidies to low income earners and capital gains tax breaks may all increase house price swings, the report found.
