Quantitative Easing And The Australian Housing Market

Contrary to the market economists’ predictions, the Australian national median house prices performed exceptionally well during most of the COVID-19 lock down periods with a hefty annual increase of 16.1% to $656,694.00 since June 2020. The traditional housing market drivers such as population growth and GDP growth were experiencing either negative or lacklustre growth for the same period, signifying the Australian housing market may have experienced unprecedented shift in its performance dynamic. The rebound in house prices was said to have been supported by the unconventional Reserve Bank of Australia monetary policy, namely Quantitative Easing (QE), in response to the COVID-19 pandemic crisis. The increased levels of liquidity and the lower mortgage rate due to the QE measures may have impacted the housing markets and this unprecedented and fundamental shift in the housing market dynamics require immediate attention to better understand the implications and its effects on market participants.