The minutes of RBA’s latest board meeting on 2 June stated for the first time the central bank’s concerns on the imbalance of supply and demand in two of Australia’s hottest housing markets.
"Although housing price inflation had remained high in Sydney and, to a lesser extent, in Melbourne over recent months, there had been some divergence in price developments for different segments of these markets; price inflation of detached houses had increased, whereas price inflation for units had eased in both cities," the RBA minutes, published on Tuesday, say.
“Noting that housing price growth in other cities and regional areas had declined over recent months, members discussed the strength and composition of underlying supply and demand conditions in different parts of the housing market”.
It added that there was a relatively low stock of dwellings for sale in Sydney and Melbourne and that dwellings were generally not taking too long to sell.
The observations were made in the same day the RBA opted to hold the cash rate at 2%.
For analysts, RBA governor Glenn Stevens fell short on giving the industry a clear guidance on the bank's next move.
"It is . . . possible that a period of very low interest rates will eventually lead to higher inflation for land and construction work, as is normally required to bring forth more supply of a particular good or service," assistant governor Christopher Kent was quoted as saying by the Sydney Morning Herald
"These pressures might arise from a depletion of suitable land available for development or a need to attract more developers and workers into the industry. In such circumstances, any further increases in construction demand would tend to push up prices of existing and new dwellings."
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