Buying a home has never been harder<\/a><\/p>\nHome prices have risen by almost 50 per cent in the past five years, pushing housing affordability to its worst levels on records, a new report has found.<\/p>\n
“Inflation is clearly too high, already materially above the bank’s November forecasts, but the economy remains weak and the job market continues to slow.<\/p>\n
“Geopolitical uncertainty also bubbles along in the background, largely ignored by financial markets, but still potentially impacting economic conditions.”<\/p>\n
Nerida Conisbee, Ray White Group chief economist, said high housing costs were keeping overall inflation elevated, and it was creating a policy headache for the RBA.<\/p>\n
“The challenge for policymakers is that the most stubborn sources of inflation are now the least responsive to interest rate increases,” she said.<\/p>\n
“Rents remain high due to a lack of rental housing. Construction costs are easing only gradually as labour and materials constraints continue to affect new housing delivery.<\/p>\n
“Utilities and insurance, which have been major contributors to household cost pressures, are driven largely by structural and regulatory factors, not consumer demand.<\/p>\n
“This creates a policy paradox.<\/p>\n
“Keeping rates high weighs on household spending and business investment, helping slow demand.<\/p>\n
“But these same restrictive conditions are holding back residential construction and discouraging new rental supply, reinforcing the very housing inflation the RBA is trying to control.”<\/p>\n
Federal Treasurer Jim Chalmers said the pick-up in inflation recently was partly due to temporary factors and was “something we’ve seen in many parts of the world”.<\/p>\n
“While millions of Australians would have preferred more rate relief, this decision was widely anticipated by economists and markets,” he said.<\/p>\n
Wrong to think RBA board has ‘no appetite’ to lift rates, governor says<\/p>\n
In her post-meeting press conference, Ms Bullock said board members were not exactly comfortable with the recent rise in inflation in Australia.<\/p>\n
She said it would be wrong to think that they had no appetite to lift rates, but they had opted to keep rates steady over the summer.<\/p>\n
“The board will do what it thinks it needs to do to get inflation back to 2.5 per cent,” Ms Bullock said.<\/p>\n
![\"A](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/12\/c02e24810e9fb5291f2eeda6e5044544\")
<\/p>\n
Michele Bullock says it is wrong to think that the RBA Board has no appetite to lift rates. (AAP: Dan Himbrechts)<\/p>\n
“And it’s uncomfortable. The conversation we had today, they are uncomfortable where it is.<\/p>\n
“If you look back six or seven months ago, things looked to be travelling in the right direction. It looked like it was appropriate [to cut rates then].<\/p>\n
“[But] data changes, circumstances change, a lot of the risk that people are really worried about, in terms of the world economy, has abated.<\/p>\n
“And so when things change, you have to change your view. And it’s appropriate that the board, I think, is agile and nimble.”<\/p>\n
Why Michele Bullock is relieved she’s keeping rates on hold<\/a><\/p>\nLast week the RBA governor issued a blunt warning on the state of financial markets and as markets continue to shift from traditional valuation methods, plenty of cool heads are getting nervous.<\/p>\n
EY chief economist Cherelle Murphy said the market had been expecting a change in the RBA’s tone compared to its previous meeting in November, when its tone was still quite dovish, and that was delivered today.<\/p>\n
“The economy appears to be operating at, or maybe even above, its capacity and so the Reserve Bank cannot provide any more stimulus with it generating unwanted inflation,” she said.<\/p>\n
“At worst, the economy could already be operating with domestic demand at a level, and with interest rates, that are encouraging inflation.<\/p>\n
“In light of changing dynamics, the Reserve Bank is being rightly cautious, but any continuation of recent inflation changes and upgraded inflation forecasts will likely come with tighter monetary policy in 2026.”<\/p>\n","protected":false},"excerpt":{"rendered":"The Reserve Bank of Australia (RBA) has left interest rates on hold at 3.6 per cent, with the…\n","protected":false},"author":2,"featured_media":337801,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[64,63,46833,5465,5626,44,183],"class_list":["post-337800","post","type-post","status-publish","format-standard","has-post-thumbnail","category-australia","tag-au","tag-australia","tag-cash-rate-target","tag-inflation","tag-interest-rates","tag-news","tag-reserve-bank-of-australia"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/337800","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=337800"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/337800\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/337801"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=337800"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=337800"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=337800"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}