The Reserve Bank of Australia (RBA) is still keeping a close watch on the heat coming from the housing market.
However, the new RBA governor, Philip Lowe, says he’s more comfortable with the situation now than 12 months ago.
“One issue that has attracted a lot of attention of late is the housing market,” he told the House of Representatives Standing Committee on Economics today.
“The construction cycle has a bit more momentum than we expected earlier. This is adding to the supply of housing in the country, which partly explains the slow growth in rents.”
He says the rate at which established housing prices are increasing has also moderated, although there are some pockets where prices are rising briskly.
“Credit growth and turnover in the housing market are also lower than they were a year ago,” Lowe says.
The banks have also tightened lending standards, increasing the loan to valuation ratio for investment properties.
“Overall, then, the situation is somewhat more comfortable than it was a year ago, although we continue to watch things carefully,” he says.