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Research Program

The RBA and the Housing Bubble

One future project that I’ve started to plan out is an extension of my PhD’s strategic subcultures framework to central banks and monetary policy. I note Reserve Bank of Australia governor Philip Lowe’s comments yesterday:

Speaking at the Australian Financial Review’s Business Summit, Mr Lowe confirmed that the recent rise in house prices across most of the country — to record levels in many areas — had been a topic of discussion at recent RBA board meetings.

In a veiled warning to home buyers, Mr Lowe cautioned that the prospect of lower population growth over the next couple of years could outweigh some of the other factors driving prices higher.

My PhD framework focused on terrorist organisations but I realised in 2018 that aspects of it could be extended to the political economy of central banks, debt markets, hedge funds, and financialisation. My writing model for this project is the historian Adam Tooze.

Categories
Research Program

The Power of Inherited Wealth

Yesterday, Professors Lisa Adkins and Martijn Konings had a Guardian op-ed article on the inter-generational importance of inherited wealth in helping Gen Xers and Millennials to get on Australia’s property ladder. The analysis builds on Adkins, Konings and Melinda Cooper’s recent book The Asset Economy (Polity, 2020).

Economic stratification to date is often defined in the academic literature about the positional power of specific jobs. Entry into the middle class used to depend on what kind of job you were able to get – which in turn related to the ‘sorting machine’ of higher education. Adkins, Cooper and Konings find that the contemporary Australian middle class now relies more on access to long-term housing and other property. Australia has some of the most expensive housing in the world, so, therefore, inherited wealth now largely defines the stratification between the comfortable middle class and precarious renters.

There are potential complications to Adkins, Cooper and Konings’ insight which deserves further research. The Australian Federal Government’s First Home Loan Deposit Scheme and First Home Super Saver Scheme potentially open up the barriers to new first home owners and will facilitate more financialisation of mortgage-backed securities. Estate planning strategies – such as in blended families – also deserve further reflection. If we now live in an asset economy then understanding how assetisation and financialisation work – as early as possible – will become an important key to differential wealth creation.