RBA looks on the bright side of rising house values

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The Reserve Bank of Australia appears to be looking at rising house prices as a positive, as the trend encourages people to spend more money.

According to the latest minutes of the central bank’s members meeting, the RBA recently seems to be less concerned than it was months ago about the growth in housing investments.

In particular, the minutes took note of property investment growth’s strong performance. It also said that although house price growth has slowed from 2013’s pace, prices were still hot in Sydney and Melbourne.

The RBA said “rising house prices were adding to household wealth at a time when wages were growing slowly, encouraging people to spend more money”.

Growth in mortgages to property investors were also noticed, as it had continued "at a noticeably faster rate than credit to owner-occupiers, with no signs that dwelling investment growth would slow in coming quarters”.

The central bank added that low interest rates and current population growth would help support growth in housing activity and the established housing market.

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