The housing market needs careful monitoring according to an overwhelming number of members of the Reserve Bank Board.
In the February minutes of their meeting the RBA says large increases in house prices in some cities and the strength in lending to investors in housing assets warrant the keen eyeballing.
The Australian Prudential Regulation Authority (APRA) announced a series of measures in December to crack down on risky lending and other housing risks in the economy.
“It would be important to assess the effects of the measures designed to reinforce sound residential mortgage lending practices announced by APRA in December,” the RBA minutes said.
According the minutes, “activity and prices in the housing market had continued to be bolstered by the low level of lending rates and strong population growth”.
The RBA predicts further growth in property investment in the future indicated by residential building approvals.
“Housing price inflation had moderated from the rapid rates seen in late 2013, but remained high and in Sydney and Melbourne had been well above the growth rate of household income,” the minutes said.
“Growth of owner-occupier housing credit had remained around 6 per cent in year-ended terms, while investor credit had continued to grow at a noticeably faster rate.”
