RBA still keeping a close eye on rising house prices

The RBA could be coming to the opinion that house prices aren’t actually cooling as much as they’d like.

The shift in thinking comes after the central bank warned that households are still borrowing more than their incomes are rising.

Prices in Melbourne and Sydney just keep rising, even after regulators imposed further crackdowns on lending five months ago.

In their latest minutes, the RBA said they are focused on balancing the risks associated with high household debt amid low inflation figures.

Central bank governor Philip Lowe said banks had responded to regulator crackdowns and it was unlikely more measures would be introduced, expecting housing credit growth to remain at around 6-7 per cent.

“Banks are paying more attention to credit assessment and the lending standards have improved, so I think we’ve done enough for the time being,” he said.

ANZ economist David Plank told Australian Financial Review he didn’t think the RBA was looking to lift interest rates any time soon to try and stabilise the economy.

“We do think, however, that we are closer to the point where the RBA might move interest rates for financial stability reasons if it had a high degree of confidence that the first two objectives (inflation and employment) were being achieved,” he said.

“It suggests the bank is less confident that price growth is moderating to a satisfactory degree.”


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