Australia’s most unpopular man makes a difficult job harder as country battles a chaotic housing market

The Reserve Bank of Australia’s governor Philip Lowe is strongly in the running for the country’s most unpopular man, in a very competitive field. On the first Tuesday of the month, except for January, Lowe has delivered news on interest rates.

He rarely has brought good tidings for mortgage holders, and last month the official interest rate went up to 4.1 per cent, a level not seen in Australia since 2012.

Lowe has a difficult job, but he has managed to make it even harder with a selection of ill-timed gaffes. In 2021, he confidently predicted that there would be no interest rate rises in Australia until at least 2024. Last month, he told struggling Australians to get a flatmate or stay with their parents to manage spiralling rental costs on accommodation.

“As rents go up, people decide not to move out of home, or you don’t have that home office, you get a flatmate,” he said.

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Lowe will almost certainly keep increasing interest rates to fight inflation, while landlords will pass on the higher costs of their mortgage to their tenants who are in an increasingly vulnerable position

“Higher prices do lead people to economise on housing. Kids don’t move out of home because the rent is too expensive, so you decide to get a flatmate or a housemate because that’s the price mechanism at work.”

Lowe has also warned that rising rent and house prices may not be within the realm of the federal government’s control due to strong population growth as migrants enter the country after Covid-19.

The rental crisis across Australia shows no signs of slowing, with migrants entering the country finding high prices for even the most basic accommodation.

“Are there 2 per cent more houses? No ... We’ve got a lot of people coming into the country, people wanting to live alone or move out of home,” Lowe said.

“The way that this ends up fixing itself is, unfortunately, through higher housing prices and higher rents.

“We need more people on average to live in each dwelling, and higher prices do that.”

It is a vicious circle. Lowe will almost certainly keep increasing interest rates to fight inflation, while landlords will pass on the higher costs of their mortgage to their tenants who are in an increasingly vulnerable position in cities such as Sydney, Melbourne and Perth.

Lowe will find out whether he will keep his job in September. It seems highly unlikely as he finds himself on a collision course with the Federal Government and its policies. Labor has increased wages and overseen record unemployment, yet productivity across Australia is slowing.

Lowe will not admit it publicly, but Labor’s planned policies will pour ethanol on the inflationary flames that are engulfing the country. Particularly Labor’s reluctance to discard incoming stage three tax cuts that will see people earning between $45,000 to $200,000 paying 30 per cent in tax. This policy is due to cost the budget $243 billion over the next decade.

The competition for rental property across Australia’s major cities has never been fiercer

The Treasurer Dr Jim Chalmers has the perfect scapegoat in Lowe if his government cannot bring down inflation. Last week, a poll commissioned by the Nine media network reported 52 per cent of Australians want Lowe removed after seven years as governor. Indeed, when asked about the recent rate rise in June, Chalmers quickly distanced himself from Lowe. He said the decision was “difficult to understand and difficult to cop”.

“The Reserve Bank’s job is to squash inflation without crunching the economy,” he said.

“And they will have lots of opportunities of course to explain and defend the decision that they’ve taken. My job is different.”

Lowe likely understands that his card is marked, and he will be leaving his role in September. He has three further opportunities to raise interest rates, and it is difficult to see him sitting idle. Labor is using him as a small human shield, and he is at least performing admirably in that role.

Regardless of papier-mâché popularity contests between the Reserve Bank and Labor, the topic of accommodation availability and affordability across Australia continues to be a serious worry for Irish residents or those planning to live in the country.

The competition for rental property across Australia’s major cities has never been fiercer, and if renters do manage to beat the competition and move in, they are then vulnerable to rent increases from stretched landlords each year.

Australia has long enjoyed its reputation as the lucky country to incoming migrants. Its national anthem reminds its residents that its land abounds in nature’s gifts, and it has beauty, rich and rare. This cannot be denied. What the country does not currently have is a viable plan to calm its chaotic rental market.