RBA Downplays Housing Market Risk Despite Six-Month Price Decline

RBA Governor Michele Bullock has downplayed concerns over housing market stability, despite a steep six-month price decline. According to the Reserve Bank of Australia's half-yearly Financial Stability Review, only about one per cent of borrowers are facing negative equity due to soaring interest rates.

The report suggests that even if housing prices fall by 20 per cent from current levels, around five per cent of mortgages would still be in negative equity. This is in line with the deepest downturn predictions made by mainstream economists, which estimate a peak-to-trough decline of around 13 per cent.

Bullock was unapologetic for raising interest rates to their highest level in 15 years, saying that the bank had to act on inflation for the good of all Australians. She noted that pay packets are not going as far as they used to and that inflation needs to be addressed.