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Reserve Bank Governor Philip Lowe has laid the blame for higher property prices on matters directly under the control of the state government and local councils.

Mr Lowe levelled the blame during a speech at the Australia-Canada Economics Leadership Forum in Sydney today.

He said both countries were find that “at a time of strong demand from both residents and non residents, there are challenges on the supply side”.

“I understand that zoning is an issue in Canada, just as in Australia,” he said. “In some parts of Australia, there has also been under-investment in transport infrastructure, which has limited the supply of well-located land at a time when demand for such land has been growing quickly. The result is higher prices.”

Mr Lowe said the increase in overall housing prices had gone “hand-in-hand” with a further pick-up in household debt.

“In both countries the ratio of household debt to income is at a record high, although the low level of interest rates means that the debt-servicing burdens are not that high at the moment.”

Mr Lowe said while Australian households were “coping reasonably well with the high levels of debt”, there were “some signs that debt levels are affecting household spending”.

“Households are carrying more debt than they have before and, at the same time, they are experiencing slower growth in their nominal incomes than they have for some decades. For many, this is a sobering combination.” 

Sophie Foster,, 22 February 2017