RBA boss slammed for being out of touch

As the housing crisis continues, the head of the Reserve Bank (RBA) is under fire today after suggesting that Australians should live at home with their parents or get a flatmate to help slow down rising rental rates.

RBA boss Philip Lowe, who was speaking at the senate estimates hearing today, said that there is no immediate fix for the rental market and that not enough homes are being built to keep up with population growth, driving up rent and the cost of living.

Lowe said that raising rents and house prices would provide a deterrent for people wanting to move out from the family home or to live alone and that more people needed to occupy households at a higher density than the current rate.

"We need more people on average to live in each dwelling, and higher prices do that," he said.

“The higher prices do lead people to economise on housing, don’t they? Kids don’t move out of home because the rent is too expensive, or you decide to get a flatmate or a housemate,”

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Lowe's comments have sparked fears that another rate rise is imminent in June and outrage from many Australians who are already struggling with their mortgages, rent rises, and the cost of living.

Many commenters on Twitter suggested that Lowe, who earns over $1 million a year as the head of the Reserve Bank and lives in a 5-bedroom house in the upmarket Sydney suburb of Randwick where the median house price is over $3 million, should open up his own home to a few flatmates.

Another decided to place an advertisement for flatmates on behalf of Lowe.

On a Reddit thread Lowe's comments were described as "depressing" and "out of touch" as many Aussies described the already tough conditions they are facing as mortgage holders and as tenants.

Parents of children and of young adults blasted the sharehouse suggestion as impractical and concerning while those with adult children costs questioned how they could manage the costs of housing family members well into their twenties or even thirties.

Others said that the huge cost of stamp duty means many Australians are reluctant to downsize and called for a switch to an alternative such as an annual land tax to allow more homeowners to move to properties that suit their needs.

One commenter wrote:

My dad won’t downsize because “I’d have to pay tens of thousands of dollars for a stamp. I’m not stupid.”

He’s not wrong. : /

Greens Leader Adam Bandt weighed into the debate on Twitter saying, "The housing crisis is pushing more and more people into already crowded sharehouses, but sticking a bunk bed in your kitchen shouldn't be how you survive a totally cooked rental system."

In the meantime as mortgage holders nervously await the next RBA meeting on Tuesday, modeling by RateCity.com.au shows that another 0.25 percentage point rise would mean the average borrower with a $500,000 loan taken out before May 2022 could soon be paying a total of $1,134 more a month.

That’s a 49 per cent increase in just over a year.

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