The RBA has given a warning that it believes property prices may fall due to an overheated market.
The nation’s central bank will today release its biannual Financial Stability Review, and in it they address the current risky economic environment in Australia amid record-low interest rates.
The report includes warnings that our real estate market may become unbalanced with lending to investors being out of proportion to the quantity of the share of rental housing supply.
The RBA review says: “The main risk from this strong investor activity appears to be that the extra demand may exacerbate the housing price cycle and increase the potential for prices to fall further”.
“The composition of housing and mortgage markets is becoming unbalanced.”
“This has been evident in the housing market in and its concentration in Sydney and Melbourne.”
Statistics show housing loan approvals in NSW were almost 90 per cent higher than two years ago and 50 per cent higher in Victoria.
The review also mentions first home buyers, saying they have the potential to be priced out of the property market by investors who have bigger incomes and the capacity to make bigger bids on homes.