Imposing rent controls to ease the housing crisis would make the shortage of homes even worse over the long term, outgoing RBA governor Philip Lowe warned on Friday, saying politicians should resist the push for such short-term solutions.
“And that means zoning and planning deregulation, and it means ... state and local governments being part of the solution.”Dr Lowe called for state governments to deregulate restrictive zoning laws, which he said had pushed up the cost of land to levels not seen almost anywhere else in the world. “We know there’s no more important issue anywhere in the state right now than housing – that’s why we’re working hard on a housing package and will have more to say in due course,” a Victorian government spokeswoman said after Dr Lowe’s comments.Dr Lowe said one of the factors putting upward pressure on rents was a surge in overseas migration, which had caused population growth to outstrip the construction of new homes.
“Rents just increased at the fastest rate in 35 years, so the status quo is hardly working. But most importantly, rent caps help renters, and that’s exactly what we need to do right now,” the Greens housing spokesman said. Although persistently high services inflation meant the RBA retained a tightening bias, Dr Lowe pointed to the emerging Chinese economic slowdown as a new downside risk to the inflation outlook.Overall, he said, it was “encouraging” that recent data were consistent with inflation returning to the RBA’s 2 to 3 per cent target range by 2025, adding to expectations that the central bank was at the start of an extended cash rate pause.
The European Central Bank raised its benchmark deposit rate to 3.75 per cent last month, but signalled rates might have peaked. Investors are doubtful the US Federal Reserve will raise rates again after it lifted the federal funds rate from 5.25 per cent to 5.5 per cent last month.Data released overnight showed that prices in the United States increased by just 0.2 per cent last month, bolstering expectations of a rate pause. While the annual inflation rate ticked up to 3.