RBA And Federal Budget 2021 Update: Improving Affordability And Accessibility To The Housing Market
From the Desk of the Chief Economist
May has proven to be an extremely important month for the Australian economy, with the release of the Reserve Bank of Australia’s statement on monetary policy, days prior to the release of the 2021 Federal Budget.
Both parties agreed that although there is no playbook to speak to in a COVID-19 pandemic situation, the Australian economy proved to be resilient. Despite the enormous contraction from April 2020 onwards there has been rapid recovery led by a shift in demand from services to goods. Viewed as one of the few countries able to contain the virus, Australia is also part of a very small group of countries that has economically bounced back from COVID-19.
The economics of the housing market is dependent upon the balance of demand and supply, both of which are heavily influenced by monetary policy (enacted by the Reserve Bank of Australia – RBA) on cash rate matters and fiscal policy (enacted by the Government, at all three levels) on grants, schemes, and taxation matters.
Housing loan commitments have soared in 2021 due to a combination of factors: household income resilience and a change in spending habits, fiscal policies such as HomeBuilder and the expansion of the First Home Loan Deposit Scheme, and extremely low home loan mortgage interest rates.