RBA warns rent prices are weighing on inflation as rate hike fears rise

The surging costs of renting in Australia is adding to the nation’s domestic inflation problem and could be backing the Reserve Bank into a corner that will result in more rate rises.Assistant governor Sarah Hunter faced the Senate Select Committee on Intergenerational Housing Inequity on Thursday, pushed to answer questions on the RBA’s thinking around Australia’s struggling property market.RBA assistant governor, Sarah Hunter. Picture: NewsWire / Martin OllmanAsked about rent costs, Dr Hunter acknowledged that record high prices were a significant driver of inflation.“Rent is part of our inflation challenge,” she said.Australia’s median rent hit a record high in June of $670 per week, realestate.com.au data shows. This is led by capital cities where the median rent is $690, while rent in the regions is sitting at $600.While rent has increased 6.4% over the past year – rising almost twice as fast as the increase in the value of the housing market – Dr Hunter confirmed the RBA would not provide a formal view on rent capping. All states and territories in Australia with the exception of the Northern Territory only allow investors to increase tenants’ rent once a year. Various rules ...