Reserve Bank Governor Michele Bullock has delivered a stark warning about the Albanese government's signature housing policy, suggesting the 'Help to Buy' scheme could inadvertently push property prices higher and complicate the ongoing battle against inflation.
Central Bank Chief Sounds Alarm
In a sobering assessment that puts the government on notice, Ms Bullock told a parliamentary hearing that while well-intentioned, the shared equity scheme risks adding fuel to Australia's already heated property market. The RBA boss expressed concerns that increasing purchasing power without addressing fundamental supply issues could have unintended consequences.
'When you add extra demand without extra supply, you're going to see prices go up,' Ms Bullock cautioned during her testimony.
The Help to Buy Controversy
The government's controversial scheme would allow 10,000 eligible homebuyers annually to purchase properties with the Commonwealth taking up to 40% equity in new homes and 30% in existing dwellings. While designed to assist struggling Australians enter the property market, critics argue it fails to address the core issue of housing supply.
Ms Bullock's intervention comes at a delicate time for the government, which has made housing affordability a central pillar of its political agenda. The RBA governor's comments suggest the central bank is closely monitoring how fiscal policy might impact its inflation-fighting efforts.
Inflation Battle Complicated
The warning carries particular weight given the RBA's ongoing struggle to return inflation to its 2-3% target band. With housing costs being a significant component of inflation measures, any policy that potentially pushes property prices higher could force the central bank to maintain higher interest rates for longer.
'We're very focused on the inflation story and how various government policies might affect that,' Ms Bullock told committee members, highlighting the delicate balance between supporting homebuyers and maintaining economic stability.
Political Fallout
The opposition has seized on the RBA governor's comments, with housing spokesman Michael Sukkar declaring that 'even the Reserve Bank can see this scheme is inflationary and will push prices up.' The government, however, remains committed to the policy, arguing it will provide crucial support to essential workers and low-income families struggling to enter the market.
As the debate intensifies, all eyes will be on whether the government heeds the central bank's warning or presses ahead with a scheme that could have far-reaching consequences for Australia's economic landscape.
