Saving The Backyard And Boosting Liveability

The Victorian State Government is taking action to protect the much-loved backyard and keep more garden space in local suburbs.

Minister for Planning Richard Wynne announced the changes today, which follow a review of suburban Residential Zones. The review found the zones had been implemented in an inconsistent manner across Melbourne, but the proposed changes will protect suburban character, no matter your postcode.


The changes are linked to the Government’s refreshed Plan Melbourne, a blueprint for ensuring our suburbs develop and grow, but never at the expense of neighbourhood character.

There will no longer be a cap on how many dwellings can be built on a block, but new requirements mean developments must have a mandatory percentage of garden space.

It’s all about giving more Victorians access to the outdoor space that is the cornerstone of great homes, and giving kids more opportunities to form their childhood memories in backyards every day all over the state.

Under new rules, blocks between 400-500 square metres require a 25 per cent minimum garden area, blocks between 501-600 metres need 30 per cent, and blocks larger than 650 square metres must have a 35 per cent garden area.

The former Liberal government’s version of Plan Melbourne failed to address housing affordability, and ignored the need for a long-term plan that allows for growth but prevents over-development.

We’ve listened to councils, industry and members of the public to right those wrongs – and to maintain our renowned liveability.

Plan Melbourne aims to deliver:

  • Jobs and services closer to where people live
  • A fixed urban boundary
  • Sustained investment in infrastructure, such as Melbourne Metro Rail and level crossing removals
  • Clarity about where growth can occur in the suburbs
  • Responses to climate change by reducing Melbourne’s carbon footprint and growing a green economy
  • A greater focus on social infrastructure such as parks
  • Well-connected, 20-minute neighbourhoods

The Victorian Government’s plan to change some requirements of the residential zones will improve housing outcomes in our suburbs says the Housing Industry Association (HIA).

The Government’s announcement today that elements of the residential zones will be amended is seen as a logical starting point to improve residential planning outcomes.

HIA has argued that the new zone provisions introduced in 2014 have had the effect of limiting the design of new homes together with restricting the location of small medium density developments.

Property Investment and the Financialisation of Housing

An important report from the Special Rapporteur to the UN Human Rights Council highlights the “financialization of housing” and its impact on human rights. If you want to understand the rise in property investment in Australia, and the problem of housing affordability, read this! Sydney and Melbourne are “Hedge Cities”.  You cannot fix housing affordability without addressing the investment class.

The financialization of housing has its origins in neo-liberalism, the deregulation of housing markets, and structural adjustment programmes imposed by financial institutions and agreed to by States. It is also tied to the internationalization of trade and investment agreements which, as discussed below, make States’ housing policies accountable to investors rather than to human rights. The financialization of housing is also the result of significant changes in the way credit was provided for housing and more specifically, of the advent of “mortgage-backed securities”.

The amount of money involved in the purchase of housing and real estate is almost impossible to digest. Cushman and Wakefield, an American global real estate services firm engaging in $90 billion worth of real estate sales per year, publishes an annual report entitled “The Great Wall of Money” which includes a calculation of the amount of capital raised each year for trans-border real estate investments. The total in 2015 was a record $443 billion, with residential properties representing the largest single share. The report notes that “cross border flows will continue to transform real estate investment across the globe”

Housing prices in so-called “hedge cities” like Hong Kong, London, Munich, Stockholm, Sydney and Vancouver have all increased by over 50 per cent since 2011, creating vast amounts of increased assets for the wealthy while making housing unaffordable for most households not already invested in the market. Land prices in the 35 largest cities in China have increased almost five-fold in the past decade and prices for urban land in the top 100 cities in China have increased on average by 50 per cent in the past year.

The report examines structural changes that have occurred in recent years whereby massive amounts of global capital have been invested in housing as a commodity, as security for financial instruments that are traded on global markets, and as a means of accumulating wealth. The report assesses the effect of those historic changes on the enjoyment of the right to adequate housing and outlines an appropriate human rights framework for States to address them. The report reviews the role of domestic and international law in that sphere, and considers the application of principles of business and human rights.

The report concludes with a review of States’ policy responses to the financialization of housing and some recommendations for more coherent and effective strategies to ensure that the actions of global financial institutions and actors are consistent with ensuring access to housing for all by 2030. The Special Rapporteur suggests that, as a way forward, States must redefine their relationship with private investors and international financial institutions, and reform the governance of financial markets so that, rather than treating housing as a commodity valued primarily as an asset for the accumulation of wealth they reclaim housing as a social good, and thus ensure the human right to a place to live in security and dignity.

  1. The expanding role and unprecedented dominance of financial markets and corporations in the housing sector is now generally referred to as the “financialization of housing”. The term has a number of meanings. In the present report, the “financialization of housing” refers to structural changes in housing and financial markets and global investment whereby housing is treated as a commodity, a means of accumulating wealth and often as security for financial instruments that are traded and sold on global markets. It refers to the way capital investment in housing increasingly disconnects housing from its social function of providing a place to live in security and dignity and hence undermines the realization of housing as a human right. It refers to the way housing and financial markets are oblivious to people and communities, and the role housing plays in their well-being.
  2. Housing and real estate markets have been transformed by corporate finance, including banks, insurance and pension funds, hedge funds, private equity firms and other kinds of financial intermediaries with massive amounts of capital and excess liquidity. The global financial system has grown exponentially and now far outstrips the so-called real “productive” economy in terms of sheer volumes of wealth, with housing accounting for much of that growth.
  3. Housing and commercial real estate have become the “commodity of choice” for corporate finance and the pace at which financial corporations and funds are taking over housing and real estate in many cities is staggering. The value of global real estate is about US$ 217 trillion, nearly 60 per cent of the value of all global assets, with residential real estate comprising 75 per cent of the total.  In the course of one year, from mid-2013 to mid-2014, corporate buying of larger properties in the top 100 recipient global cities rose from US$ 600 billion to US$ 1 trillion.3 Housing is at the centre of an historic structural transformation in global investment and the economies of the industrialized world with profound consequences for those in need of adequate housing.
  4. In “hedge cities”, prime destinations for global capital seeking safe havens for investments, housing prices have increased to levels that most residents cannot afford, creating huge increases in wealth for property owners in prime locations while excluding moderate- and low-income households from access to homeownership or rentals due to unaffordability. Those households are pushed to peri-urban areas with scant employment and services.
  5. Elsewhere, financialization is linked to expanded credit and debt taken on by individual households made vulnerable to predatory lending practices and the volatility of markets, the result of which is unprecedented housing precarity. Financialized housing markets have caused displacement and evictions at an unparalleled scale: in the United States of America over the course of 5 years, over 13 million foreclosures resulted in more than 9 million households being evicted. In Spain, more than half a million foreclosures between 2008 and 2013 resulted in over 300,000 evictions. There were almost 1 million foreclosures between 2009 and 2012 in Hungary.
  6. In many countries in the global South, where the majority of households are unlikely to have access to formal credit, the impact of financialization is experienced differently, but with a common theme — the subversion of housing and land as social goods in favour of their value as commodities for the accumulation of wealth, resulting in widespread evictions and displacement. Informal settlements are frequently replaced by luxury residential and high-end commercial real estate.
  7. While much has been written about the financialization of housing, it has not often been considered from the standpoint of human rights. Decision-making and assessment of policies relating to housing and finance are devoid of reference to housing as a human right. Issues related to business and human rights have received some attention in recent years. However, the housing and real estate sector — the largest business sector with many of the most serious impacts on human rights — appears to have been mostly ignored.
  8. A report on the topic is timely as States embark on the implementation of the Sustainable Development Goals. If the commitment in target 11.1 to ensure access for all to adequate, safe and affordable housing and basic services is to be achieved by 2030, it is essential to consider the role of international finance and financial actors in housing systems. That will help to identify and address more effectively patterns of systemic exclusion, to ensure more meaningful human rights accountability for issues of displacement, evictions, demolitions and homelessness, and the engagement of all relevant actors in the realization of the right to adequate housing.
  9.  Constructing human rights accountability within a complex financial system to which Governments are themselves accountable, involving trillions of dollars in assets, may seem a daunting task. However, the global community cannot afford to be cowered by the complexity of financialization.8 The present report aims to cut through some of the complexity and opaqueness of finance in housing to expose the central relevance and necessity of the human rights paradigm at multiple levels, from the international to the local.
  10. The report builds on important work undertaken by the previous Special Rapporteur on the right to housing. In her 2012 report on the impact of finance policies on the right to housing of those living in poverty (A/67/286), she warned of emerging trends towards the financialization of housing encouraged by States’ abandonment of social housing programmes and increased reliance on private market solutions. She documented attempts by States to rely on the private market and homeownership, which increases inequality and fails to address the housing needs of low-income and marginalized groups. More fundamentally, she called for a paradigm shift through which housing would once again be recognized as a fundamental human right rather than as a commodity. The present report takes up that challenge.

Government establishes affordable housing taskforce

From Australian Broker.

The Turnbull Government today announced the establishment of the Affordable Housing Implementation Taskforce, which will develop an affordable housing bond aggregator model for consideration by the Commonwealth and the States and Territories.

The Turnbull Government recognises that housing affordability remains a concern for many hard working Australians, including the 30 per cent of Australians who live in rented homes, and those who rely on affordable and social housing.

An affordable housing bond aggregator would allow a financial intermediary to attract greater private sector investment into affordable housing. This would give community housing providers access to cheaper and longer term debt, freeing up capital for the construction of new affordable housing.

An expert panel has been appointed to guide the work of the Taskforce, drawing on their broad experience from the financial, affordable housing and government sectors.

The Panel will include Mr Stephen Knight as Chair, Ms Peta Winzar and Mr John Fraser and will also engage with international and domestic experts, including those from the development sector, as necessary.

Mr Knight has extensive experience in debt capital markets through his previous roles as CEO of the Treasury Corporation in New South Wales and as a previous member of the Australian Office of Financial Management advisory board.

Ms Winzar is the current CEO of the Community Housing Industry Association, the peak body for Australia’s community housing sector and has 20 years’ experience at the senior levels of government, working across a broad range of housing issues.

Mr Fraser is the Secretary to the Treasury and will be the Government representative on the Panel. Mr Fraser has extensive experience in the financial services sector as Chairman and CEO of UBS Global Asset Management from late 2001 to 2013.

The establishment of the Taskforce follows the recommendations of the Affordable Housing Working Group’s report which was endorsed by treasurers at the Council on Federal Financial Relations meeting in late 2016.

The Affordable Housing Working Group will report back by the middle of the year.

The Treasurer will be discussing social housing and housing affordability with the states and territories at the Council on Federal Financial Relations Affordable Housing Working Group later this month.

Record low rates no help to housing affordability

From The Real Estate Conversation.

The proportion of income required to meet home loan repayments was 30.4 per cent in the December quarter of 2016, according to the latest Adelaide Bank/REIA Housing Affordability Report. The result was an increase of 0.9 percentage points over the quarter.

Housing affordability declined across all Australian states during the quarter, and New South Wales remains the least affordable state for homebuyers.

However, the proportion of income required to meet home loan repayments declined 1.9 percentage points compared with the corresponding quarter of 2015.

REIA President Malcolm Gunning said historically low interest rates and modestly rising incomes were not enough to offset the increasing size of mortgages.

“Over the December quarter, affordability declined in all states,” said Gunning.

“The proportion of first-home buyers in the owner-occupier market was the largest in Western Australia,” said Gunning.

“Rental affordability also declined during the fourth quarter of 2016,” said Gunning, “with the proportion of median family income required to meet rent payments increasing 0.2 percentage points to 24.4 per cent.”

However, rental affordability improved for the year to December.

Since mid-2012, rental affordability has been improving, reflecting the pick up in housing investment from the end of 2011, said Gunning.

“Rental affordability for the quarter declined in New South Wales, Victoria, Western Australia, Tasmania and the Australian Capital Territory, but improved in Queensland, South Australia and the Northern Territory,” said Gunning.

Damian Percy, General Manager Adelaide Bank said the silver lining in the report was the fact that there was a 6.6 per cent increase in the number of first-home buyers in the December quarter, and an increase of 0.5 per cent compared with the December 2015 quarter.

“First-homebuyers now make up 13.8 per cent of total owner occupied housing,” said Gunning. “This rate has been dropping steadily over the past 5 years, but seems to have stabilised over the past 12 months.”

Percy said, “Despite this increase in first-home buyer numbers, it is still a figure well below the historical average of 18.5 per cent of the owner occupier market since the early 1990’s.”

“However, the size of the average loan for first-home buyers increased by 1.3 per cent over the December quarter to $323,633,” said Gunning.

“The increase in the average loan size is concerning,” said Gunning. “If this trend continues, then the proportion of first-home buyers in the market will continue at low rates.”

Percy said an “unwillingness” of voters who are “enjoying structural advantages that continue to keep a fire under house prices” will mean prices remain on current trends.

If current trends continue, said Percy, young people in Sydney and Melbourne will “endure” lives with “lousy housing options.”

Fast facts from the report

The average loan size for Australian first-home buyers increased by 1.3 per cent over the December quarter to $323,633.  This was a decrease of 1.5 per cent year on year.

Median rents increase slightly

Nationally, the December quarter saw a slight decline in rental affordability. The proportion of median family income required to meet median rents increased by 0.2 percentage points to 24.4 per cent.

Victoria tops again for first-home Buyers

  • Of the total number of Australian first-home buyers that purchased during the December quarter, 30.4 per cent were from Victoria.
  • The number of loans to first-home buyers in Victoria increased by 9.5 per cent. This represents a 2.1 per cent decrease compared to the December quarter 2015.
  • In Victoria, first-home buyers now make up 15.2 per cent of the State’s owner-occupier market. More than 7,000 Victorians bought a first home in the December quarter.
  • Rental affordability declined for the quarter with an increase of 0.4 per cent of income required to meet median rents.

New South Wales remains the least affordable state

  • The proportion of income required to meet loan repayments is 6.5 percentage points higher than the nation’s average. New South Wales remains the least affordable state or territory in which to buy a home.
  • Of the total number of Australian first-home buyers that purchased during the December quarter, 18.4 per cent were from New South Wales. The number of loans to first-home buyers increased by 7.8 per cent. When compared to the December quarter 2015, the number of first-home buyers decreased by 5 per cent. First-home buyers make up only 8.2 per cent of the State’s owner-occupier market – the lowest level across the nation. 4,276 first-home buyers entered the market in NSW.
  • Rental affordability declined for the quarter with an increase of 0.5 per cent of income required to meet median rents.


  • Of all Australian first-home buyers over the quarter, 24.9 per cent were from Queensland while the proportion of first-home buyers in the State’s owner-occupier market was 17.4 per cent. The average loan size to first-home buyers decreased by 0.8 per cent for the quarter, but recorded a slight increase of 0.1 per cent compared to the December quarter 2015.
  • Rental affordability improved for the quarter with a decrease of 0.2 per cent of income required to meet median rents.

South Australia

  • In the national breakdown, 5.4 per cent of first-home buyers were from South Australia while the proportion of first-home buyers of the State’s owner-occupier market recorded an increase to 10.9 per cent.
  • Rental affordability improved by 0.2 percentage points.

Western Australia

  • Western Australia recorded a 1.3 per cent increase in the number of first-home buyers over the quarter, however, this was a decrease of 11.3 per cent compared to the December quarter of 2015.
  • WA’s proportion of first-home buyers in percentage terms of the owner-occupier market across Australia was 21 per cent.  Rental affordability was steady.


  • Tasmania had the smallest average loan size.
  • The number of first-home buyers in Tasmania increased by 6.5 per cent for the December quarter or 14.2 per cent compared to the same quarter of 2015. The average home loan to first-home buyers went down by 6.6 per cent to $227,500.
  • Rental affordability declined with an increase of 1.3 per cent for the quarter or 0.7 per cent year on year.

Australian Capital Territory remains the most affordable state to buy or rent

  • The Australian Capital Territory recorded a 12 per cent increase in the number of loans to first-home buyers. When compared to the December quarter 2015, the figure decreased by 3.7 per cent. First-home buyers made up 14.5 per cent of the Territory’s owner-occupier market with the average loan for first-home buyers decreasing by 1.4 per cent over the quarter to $319,133.
  • Rental affordability declined for the quarter with an increase of 0.3 per cent of income required to meet median rents.
  • The national capital remains the most affordable state or territory in which to buy a home or rent.

Northern Territory

  • The number of loans to first-home buyers in the Northern Territory increased by 4.8 per cent which was a 29.9 per cent rise compared to the December quarter of 2015. The proportion of first-home buyers of the Territory’s owner-occupier market was 16.4 per cent. The average loan size to first-home buyers increased by 12.2 per cent to $327,367 for the quarter or 3.1 per cent year on year.

  • Rental affordability improved with a decrease of 0.2 per cent.

No, Housing Affordability Is Hitting Households Across ALL States

CoreLogic posted an interesting blog today, in which the redoubtable Cameron Kusher says “It is really important to note that the housing affordability challenges are largely a Sydney and Melbourne phenomena”.

Now, I have to say, that just not chime with our household finance analysis. Whilst I agree affordability issues are partly a function of home price movements, other factors are in play. We discussed the distribution of those unable to afford to enter the market recently. You can read our post here.

A detailed analysis of household finances, and expectations show the affordability issues is spread across the states. It would be a mistake to address affordability in just NSW and VIC. In fact if you do, you risk excluding more from other states. You need a national plan.

He is right though when he says:

From a political perspective, politicians do not want to see the cost of housing falling.  We are taught that deflation is undesirable and deflation in the value of the country’s most valuable asset class would have a much broader impact on the economy.  Keep in mind as well that every property that is rented is owned by someone, some are owned by Government but most rental properties are owned by private citizens.

Supply and demand side reforms will be no easy feat and will require cooperation from all levels of government.


A housing plan that could kill your finances

From The New Daily.

The Turnbull government’s lack of serious action on housing affordability is most obvious when one of its own MPs is calling it to account, as backbencher John Alexander did again on Monday.

Mr Alexander last year headed a government-dominated parliamentary inquiry on housing affordability that, after he’d been transferred to another inquiry, made no recommendations on housing affordability at all.

But that has not stopped the former tennis champ making a lot of noise on the subject himself. For that he should be commended.

Mr Alexander wants to keep house prices roughly where they are – what he calls “stability in the market” – but to tilt the market towards owner-occupiers rather than investors.

Well, that would be a start, but real affordability comes when house prices and wages stop diverging and start to move closer together. In an era of low inflation and low wages growth, that could take a very long time.

Among some of his more useful ideas there remains a real stinker that others, such as billionaire property developer Harry Triguboff, have raised in recent years – namely, allowing young Aussies to use their super savings to invest in their first home.

OECD warns of a ‘rout’ in house prices

That would help owner-occupiers to outbid investors, but pouring such a large amount of capital into the market would push prices even higher.

Mr Alexander told the ABC on Monday: “The most important thing … is to understand that property bought with super remains the property of your super. If you sell it, the money goes straight back into your super.

“… People aren’t getting into the market until 45, they retire at 65, then they cash in their super to pay out their house. So the money … has gone into an unassessable asset, so those people have full claim on the aged pension. They have actually used their super to buy their house.”

That sounds like a good argument, until you consider the economic context: household debt has never been higher, house prices have never been higher, and wage growth has never been slower.

In short, the super-into-housing argument comes with the standard financial product warning that ‘past performance does not guarantee future results’.

A wobbly asset class

The housing market in Australia has outperformed all other asset classes in the past two decades, but to suggest it can do so again is arguing against simple arithmetic.

Try these nonsensical arguments on a maths teacher sometime: ‘House prices can continue to outpace wages and inflation forever. Each year’s first home buyers can afford to spend a greater portion of their pay on housing. Interest rates will never rise.’

Alternatively, we can learn from the painful lesson being experienced right now in Perth, where stretched home valuations are on the decline (see chart below).

In the past 12 months, Perth house prices have fallen 5 per cent, while the ASX has risen 10.6 per cent – and that’s without counting reinvested dividends.

So a young, would-be home owner could have got themselves in quite a pickle if they’d been allowed to tip, say, $100,000 from their balanced super portfolio into the single home asset.

Their ‘super-owned’ deposit would be worth $5000 less, their home equity would be down $20,000 and a comparable super portfolio that tracked the share market would be up $11,000.

Net result: $36,000 behind. The leveraged gains of earlier years have become leveraged losses.

It’s true, of course, that in the past two decades you can find times when these numbers have been reversed.

But that was then. Young home buyers may not fully understand that now is not the time to be playing Russian roulette with super.

Superannuation fund managers are trained to maximise returns across a range of asset classes, which they trade in and out of as markets change. None would tip all of a saver’s super into a single dwelling.

There are plenty of sound ways to fix housing affordability. But at this time, more than ever, raiding super isn’t one of them.

Could 3D-Printing help solve the housing affordability problem?

From Zero Hedge.

While 3D-printing may have been faded away in recent years from the spotlight of core “disruptive” technologies, that may soon change again after a company managed to 3D-print an entire house in just 24 hours. Located in Russia, the following 400-square-foot home, or 37 square meters, was built in just a day, at a cost of slightly over $10,000.

As profiled in the Telegraph, the company Apis Cor, 3D-printing specialists based in Russia and San Francisco, built the house using a mobile printer on-site. According to the company, the walls of the building were printed and painted in just 24 hours.

What makes Apis’ process unique is that while 3D-printing a home usually involves creating the parts off-site and constructing the building later, Apis Cor uses a mobile printer to print their apartments on-site. As profiled here, in 2015 the world’s first 3D-printed apartment building was constructed in China, with the structures printed off-site.

However, the Apis process is unique in that it eliminates the need to transfer the printed blocks to the construction site.

“Printing of self-bearing walls, partitions and building envelope were done in less than a day: pure machine time of printing amounted to 24 hours,” the company said.

The main components of the house, including the walls, partitions and building envelope are printed solely with a concrete mixture. Once the house has been completed, the printer is removed with a crane-manipulator and the roof is then added, followed by the interior fixtures and furnishings, as is a layer of paint to the exterior of the house.

The total construction cost of the house: $10,134.

The initial house consists of a hallway, bathroom, living room and kitchen and is located in one of Apis Cor’s facilities in Russia. The company has claimed that the house can last up to 175 years.

Nikita Chen-yun-tai, the inventor of the mobile printer and founder of Apis Cor, explained his desire is “to automate everything”.

“When I first thought about creating my machine the world has already knew about the construction 3D printing,” he explained. “But all printers created before shared one thing in common – they were portal type. I am sure that such a design doesn’t have a future due to its bulkiness. So I took care of this limitation and decided to upgrade a construction crane design.”

He adds: “We want to help people around the world to improve their living conditions. That’s why the construction process needs to become fast, efficient and high-quality as well. For this to happen we need to delegate all the hard work to smart machines.”

Apis Cor has claimed to be the first company to have developed a 3D printer than can print whole buildings on-site.

For now the technology is in its infancy, however in a few years, the deflationary pressures unleashed by Apis-Cor and its competitors could results in a huge deflationary wave across the construction space, and would mean that a house that recently cost in the hundreds of thousands, or millions, could be built for a fraction of the cost, providing cheap, accessible housing to millions, perhaps in the process revolutionizing and upending the multi trillion-dollar mortgage business that is the bedrock of the US banking industry.

Victoria To Release Land For New Housing

The Andrews Labor Government has announced it is taking action to boost land supply and cut delays in approvals to make housing more affordable for Victorians. They will rezoning 100,000 lots within two years in key growth corridors spread in seven of Melbourne’s growth councils. They claim it will help tackle housing affordability head on.


The planning of these 17 new suburbs will include the services, infrastructure and amenity that are the very cornerstone of great communities.

While these plans roll out over the next two years, we’re slashing the time it takes for land to be shovel-ready.

The Streamlining for Growth program is also being extended another three years, helping councils streamline subdivision processes, unlock sites and speed up applications for residential and employment land.

This will ensure planning projects can progress without hold ups. Some 37 projects have already begun tackling the red tape that once delayed subdivision approvals from councils and utilities –saving time and money for both developers and buyers.

This will help build up a four-month stock of lots for sale in growth corridors to create a more competitive market, and ensure Victoria retains its strong land supply that underpins our affordability edge. Melbourne land prices remain around half that in Sydney, and this Government intends to hold on to that competitive edge.

The Government will also commence a pilot program to deliver 100 new social housing dwellings on government land as part of developments in established suburbs.

This pilot is part of a program so private developers can innovate to provide inclusionary housing in new developments.

The Labor Government is making record investments to give Victorian communities the resources and services they deserve, including $3.3 billion for the state’s public transport system and $1 billion in health infrastructure.


Invest in Urban Transport to Fix Housing Affordability

From AAP.

Soaring household debt and housing prices could make it “dangerous” to cut interest rates, the head of the Reserve Bank of Australia says.

Dr Philip Lowe has told a Federal parliamentary economics committee that a deeper cut to the official cash rate could deliver a short-term boost to jobs and inflation but also push already-high property prices and household debt levels to worrying levels.

“Is it really in the national interest to create a little bit more employment growth in the short-run at the expense of creating vulnerabilities which could be quite dangerous in the long term,” Dr Lowe said at the hearing in Sydney on Friday.

He said another rate cut could help drive down the unemployment rate, which could be lower than its current 5.7 per cent, and boost underlying inflation, which could be higher than 1.55 per cent.

RBA figures show the household debt-to-income ratio is already at 187 per cent, while total household debt is equal to about 123 per cent of the country’s gross domestic product.

“I accept that different people will come to different points on judging that trade-off; at the moment we’re in a reasonable place because the unemployment rate is broadly steady and household debt and house price growth at the aggregate level are fast enough,” Dr Lowe said.

“I feel if they were even faster at the moment we would be moving into the area where the vulnerabilities are increasing, perhaps to unacceptable levels.”

Lower housing prices and household debt levels would only marginally strengthen the case for another rate cut, he said.

The central bank chief said monetary policy alone could no longer drive growth and it was up to the Parliament to use fiscal policy — through changes to tax and spending — to support the economy.

“Monetary policy at the margin can help you, but were talking very much at the margin,” he said.

The best way the Government could reduce pressure on property prices and boost growth would be investing in urban transport infrastructure, he said.

He said with a growing population, crowded cities, poor land supply and the difficulties people encounter moving around, investment in urban transport infrastructure would be “a first order gain”.

“It increases demand, takes the pressure off ultra-low interest rates, increases the productive capacity of the economy because people can move around, it takes the pressure off housing prices,” Dr Lowe.

“It’s probably the best housing affordability policy.”