Treasury Secretary John Fraser says Sydney’s housing market is showing “unequivocal” signs of a housing bubble, as are up-market areas of Melbourne.
He has pointed to the proliferation of television home renovation shows, saying they are a sign of the way in which low interest rates are affecting Australia’s culture.
“When you look at the housing price bubble evidence, it’s unequivocally the case in Sydney, unequivocal,” Mr Fraser told senators on Monday, at an estimates hearing.
“It’s certainly the case in the higher priced areas of Melbourne, and I base that on my own observation [as well as the data].”
“It does worry me that the historically-low level of interest rates are encouraging people to perhaps over-invest in housing,” he said.
“I’m not talking just about buying housing, I’m talking about investing in housing. You’ve just gotta see a plethora of these renovation shows to realise something’s amiss,” he said.
Fraser was more guarded than I had hoped – there’s no ‘perhaps’ about it – but finally it has been said.
Now, we can start having a proper debate about the absolute, unmitigated debacle that is housing policy in this country.
An anecdote: a few weeks ago, I happened to meet the magnificent living treasure, John Stone, at the third Friedman Conference here in Sydney. The former secretary to the Treasury told me that, when Ted Evans retired as secretary in 2001, Stone had recommended to then-Treasurer Peter Costello that he appoint Fraser as secretary. However, Fraser was at that time earning squillions as he made his way up the greasy pole at UBS, and so the (very capable), Costello couldn’t match anything like that opportunity, and so Ken Henry won the gig.
John Fraser, I’m glad you’ve come back.