RBA Highlights Housing Shortfall as Key Driver of Rental Crisis

2

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The report, authored by Declan Twohig, Anirudh Yadav, and Jonathan Hambur, comes at a critical time when the nation faces intense scrutiny over rising rental prices and the affordability of housing. Despite widespread assumptions, the authors highlight that landlords are unlikely to transfer increased costs resulting from interest rate hikes to their tenants. This perspective is noteworthy, considering the RBA has adjusted interest rates upwards on 13 occasions over the past 18 months.

The analysis reframes the conversation on Australia's rental market, positioning the lack of adequate housing development as the more influential factor. As observed in other global cities experiencing similar crises, such as New York and London, the shortfall in housing creation rather than borrowing costs often stands at the crisis's core.

The backdrop to this report highlights a bigger picture, one that considers urban planning and government policies as central issues to be addressed. By focusing on maintaining a steady construction pipeline, there could be hope for stabilizing the rental market and easing the burden on renters.

An illustrative example of housing projects being delayed or paused could be seen as correlating with the rental shortages. Furthermore, initiatives like tax reforms and incentive structures for developers might stimulate faster growth in housing supply, with potential knock-on effects benefiting struggling renters.

Interestingly, the authors pointed to scenarios in other sectors, such as commercial property, where despite fluctuating interest rates, the availability of market stock generally dictates lease terms and rent reviews, rather than interest financial pressures alone.

Published:Thursday, 17th Oct 2024
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Finance News

Clear

Investor Home Loans Surge Amid Record Borrowing

26 Dec 2025: Paige Estritori

In the third quarter of 2025, Australia's property market witnessed a significant shift as investors accounted for two out of every five home loans. Data from the Australian Bureau of Statistics (ABS) revealed that over 57,000 investors borrowed nearly $40 billion during this period, marking a 17.6% increase from the previous quarter. This surge underscores a growing trend of investor dominance in the housing sector. - read more

First Home Buyer Loan Applications Surge by 39.2% in October

26 Dec 2025: Paige Estritori

October 2025 marked a significant milestone for first-time homebuyers in Australia, with loan applications surging by 39.2%. This remarkable increase is largely attributed to the federal government's expansion of the 5% Deposit Scheme, which has made homeownership more accessible to a broader segment of the population. - read more

Australian Home Prices Experience Sharpest Rise in Over Two Years

26 Dec 2025: Paige Estritori

October 2025 witnessed a significant surge in Australian home prices, with a 1.1% increase-the fastest monthly rise since June 2023. This growth reflects a robust rebound in the housing market, driven by several key factors. - read more

APRA's New Cap on High Debt-to-Income Home Loans: What Borrowers Need to Know

18 Dec 2025: Paige Estritori

The Australian Prudential Regulation Authority (APRA) has announced a significant policy change aimed at mitigating emerging risks in the housing market. Effective February 2026, APRA will impose a cap on high debt-to-income (DTI) home loans, limiting banks to issuing no more than 20% of new home loans with DTI ratios of six times or higher. This measure applies to both owner-occupier and investor loans, excluding new housing developments. - read more

Commonwealth Bank Raises Alarm on Unsustainable Home Loan Demand

18 Dec 2025: Paige Estritori

The Commonwealth Bank of Australia (CBA), the nation's largest lender, has recently voiced concerns regarding the escalating demand for home loans, suggesting that this surge may be contributing to unsustainable property price increases. CEO Matt Comyn highlighted that while the bank benefits from the current housing credit boom, a more moderate growth rate would better support long-term financial stability and housing affordability. - read more

Click for more Finance News