The Organisation for Economic Cooperation and Development (OECD) has urged the Reserve Bank of Australia to raise interest rates next year to prevent housing prices rising to risky levels and potentially “unwinding sharply”.
The advice from OECD comes as a warning to Australia’s property market with house values surging and interest rates at record lows.
Australia is expected to see sluggish economic conditions lingering until 2016, weighed down by cooling commodity prices and declining resources sector investment, the Australian Financial Review reported.
The Paris-based agency added that Australia’s economy is only likely to perform at a below average rate of 2.5% in 2015, before recovering in 2016 if consumption and exports pick up.
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