The Reserve Bank governor Glenn Stevens might have labelled Sydney’s house prices as ‘crazy’ last week but that alone won’t stop further rate cuts.
Minutes from the RBA’s most recent board meeting suggest the nation’s central bank considers a potential housing bubble as localised rather than national.
“Members noted that the conditions in the established housing market vary across the country,” the RBA minutes stated.
“Although housing price inflation had remained high in Sydney and, to a lesser extent Melbourne over recent months, there had been some divergence in price developments for different segments of these markets.”
The RBA was quick to point out that in other cities and indeed regional areas house prices had actually declined.
Mr Stevens, amid current heightened debate about house prices, was noticeably upfront about the possibility of future rate cuts.
The RBA is working with the Australian Prudential Regulation Authority (APRA) to contain the risks associated with a low-interest housing market.
The minutes also referred to the Australian dollar, stating that a further depreciation in its value would offer assistance to efforts to stimulate the economy.