Baby boomers are stealing the futures of their children and grandchildren through high house prices that have stopped young people buying their own part of Australia, Reserve Bank governor Glenn Stevens has warned.
Mr Stevens, while hosing down expectations of an interest rate cut in coming months, said he was increasingly worried about the gap between those who have enjoyed surging house prices and those who will one day find themselves priced out of cities such as Perth.
Though acknowledging interest rates were a major factor in housing affordability, the governor said he could not understand why a country as big as Australia seemingly had a shortage of land.
"How is it that we can't add to the dwelling stock for the marginal new entrant more cheaply than we seem to be able to do," he asked. Addressing a parliamentary committee, Mr Stevens said key State and local government issues around supply, zoning, transportation and infrastructure seemed to be making a simple block of land more expensive than was necessary.
Baby boomers and Gen Xers that had benefited from the lift in home prices in the early parts of this decade were now sitting on huge capital gains.
"There's a very big inequality between generations building up and I think that's a social problem as much as any economic point," he said.
The governor said he believed the Reserve Bank had got ahead of the nation's inflation issues and suggested price pressures would ease in coming months.
The turmoil on global financial markets and the problems in key economies such as the US were issues, but Australia's economic future seemed assured because of its close ties to China and India.'There's a very big inequality between generations building up.' "Reserve Bank governor *Glenn Stevens *
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