Advanced Search

Share Coverage



Category: Money and Monetary Policy / Housing Industry

RBA may throw more 'sand in the gears' of the housing market

Tuesday, 14 Mar 2017 07:04:20 | Michael Janda

Sydney home prices are up more than 18 per cent in the past year, Melbourne more than 13 per cent.

The Reserve Bank has flagged throwing more "sand in the gears" of the housing market, as runaway price rises in Sydney and Melbourne renew bubble fears.

The most recent home value indices put annual price rises in Sydney above 18 per cent, Canberra at 15 per cent and Melbourne more than 13 per cent.

Those price gains are being driven by a surge in property investment, with Bureau of Statistics figures out on Friday showing that investor lending grew 27.5 per cent over the past year.

That is almost three times the speed limit of 10 per cent imposed by the bank regulator APRA in late-2014.

Speaking at a Bloomberg event this morning, the Reserve Bank assistant governor responsible for financial stability, Michele Bullock, said that speed limit had helped "put a bit of sand in the gears" of a strongly revving housing market.

"There is no doubt that the actions did address some of the risks," she said in her prepared remarks.

"Nevertheless, the early experience suggests that, while the resilience of both borrowers and lenders has no doubt improved, the initial effects on credit and some other indicators we use to assess risk may fade over time."

The use of the future tense is a little perplexing given the undoubted strength of property investor demand recognised in a range of official and private data.

Housing boom to continue


SQM Research managing director Louis Christopher says Sydney and Melbourne home prices will keep surging in 2017.

However, Ms Bullock said the bank stands ready to act if the market remains so hot.

"We are continuing to monitor their ongoing effects and are prepared to do more if needed," she added.

Pressure has been growing on regulators to curb investor lending and the latest housing boom, with Reserve Bank governor Philip Lowe recently admitting that the property market was a major factor preventing any further interest rate cuts.

AustraliaPlus


 

Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend