house bubble
Majority of experts say APRA is responsible for preventing a bubble. Image – Canva.
  • Comes as 74% of experts fear first home buyers will be pushed out of market
  • Two-thirds say APRA is responsible with 52% for RBA
  • Most experts still believe the cash rate won't rise this year

Earlier, we reported on the findings generated by Finder’s RBA Cash Rate Survey which most notably revealed that 74% of experts are concerned that first home buyers will be pushed out of the Australian market.

Additionally, more than half of experts called for stamp duty to be lowered – especially given the average stamp duty in Sydney is $34,980.

When the experts were asked who was responsible for preventing a potential property bubble, the Australian Prudential Regulation Authority (APRA) featured on 67% of responses.

Interestingly, however, 52% of responses said the RBA was also responsible for preventing a bubble. This comes despite Reserve Bank Governor Philip Lowe claiming that the RBA “does not and should control house prices”, instead, he says, the focus should be on lending standards – APRA’s ballpark.

48% did cite the Federal Government as having some responsibility in preventing a bubble, while less than a fifth believed The Treasury should take some responsibility.

Finder’s Head of Research, Graham Cooke, said many experts believe the State Government has a role to play, given stamp duty is in their domain.

“While experts have said that the Federal Government, RBA and APRA are mainly responsible for preventing a housing market bubble, most also believe that stamp duty, controlled by state governments, should also be lowered to prevent this.”

Graham Cooke, Finder Head of Research

Griffith University’s Mark Brimble stated that no single governing body is responsible for preventing a bubble.

“The RBA has a specific mandate on price stability. Consumers and lenders also have important roles to play here. The others (APRA, Government and Treasury) have a role to play in not accentuating this, but ultimately this is a market.”

Mark Brimble, Griffith Univeristy

Interest rates to remain low

All experts accurately predicted the cash rate to remain on hold at 0.10%, however, not all experts believe the cash rate will stay at this level.

15% said they expect a cash rate rise before the end of the year, although Mr Cooke argues interest rates might rise regardless if the RBA decided to increase the cash rate or not.

“Although the RBA will likely take a step back this year, this doesn’t mean banks won’t raise interest rates. The last time we had a stagnant rate between 2016 and 2019, we saw banks move their rates seven times, five of which were increases.”

Graham Cooke, Finder Head of Research

Shane Oliver, AMP Capital, said he does not expect the cash rate to rise anytime soon, given little wage growth.

“The RBA’s preconditions for a rate hike – namely actual inflation sustainably within the 2-3% target, materially higher wages growth and a tight labour market – are unlikely to be met for several years.”

Shane Oliver, AMP Capital

Saul Eslake of the Corinna Economic Advisory remarked he was surprised the RBA had entirely ruled out increasing interest rates.

“The RBA has been so emphatic that they won’t increase the cash rate until “2024 at the earliest”, that it’s difficult not to take them at their word.”

“Nonetheless, I am surprised that they haven’t left themselves at least a bit of ‘wriggle room’ to allow for the possibility – which, though small, is surely not zero – that the economic conditions they’ve stipulated for raising the cash rate aren’t met before then.”

Saul Eslake, Corinna Economic Advisory

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