RBA - Housing

There was a talk yesterday by an RBA officer where he discussed housing and housing affordability. It was academic and analytical in it's content rather than providing any clues as to the economy or interest rates.

Something that's important to be aware of though is that there is a battle within the RBA as to whether monetary policy should be used to control asset prices such as housing or not. On one side the argument is monetary policy should focus on inflation rather than the assets of a particular sector. The other side argue that monetary policy should be used to impact on the asset prices of that sector before a bubble is created. While the RBA won't say it they have used monetary policy to impact on housing prices in the past - early / mid 90s for instance. Glenn Stevens has not weighed into this battle but he no doubt has his eye on house prices and if they start to take off I expect they will tighten soon after.