House prices expected to rise for now: RBA | Liverpool City Champion
Reserve Bank of Australia Governor Philip Lowe predicts house prices will rise further, but says some factors may start to work the other way around,
Figures released this week showed home values rose more than 16% nationally over the past year, the fastest annual pace since February 2004.
“It is likely that we will see further increases in the near future,” Dr Lowe told the House of Representatives economic committee on Friday.
But he said it was a global story, with nearly every city in the world facing rising house prices, largely because interest rates are low and are expected to stay low.
However, he said some factors could start to work the other way around in Australia, with population growth at its lowest in decades and a very high rate of new home construction.
He said that every day the prices go up, it is harder for people to afford a new home, so at some point the price hikes will end.
“But I’m afraid I can’t predict when that will happen,” Dr Lowe said.
There have also been few signs of a deterioration in lending conditions during this latest rapid rise in house prices.
“There are banks that have eased slightly and others that have tightened slightly,” Dr Lowe said.
“The lending standards that are applied seem reasonable and reasonable.”
He said Australia was not in a situation seen over the past decade, where nearly half of the country’s loans were interest-only, meaning no dollar of principal had to be repaid. regularly.
“We don’t see lending standards getting weaker,” he said.
If they did, he warned that the Australian Prudential Regulation Authority or the RBA would take regulatory action.
Regulators would also be concerned if credit growth were to accelerate noticeably from here and appear to stay at a higher level.
Dr Lowe said if double-digit credit growth was sustained, when income growth was four or five percent, it would be problematic.
“At some point, APRA would consider interventions,” he said.
Associated Australian Press