The Board of the Reserve Bank of Australia has unanimously agreed to keep a close eye on future developments in the housing market, the Minutes of the February 2015 Monetary Policy Meeting of the RBA Board stated.
The dramatic highs in housing prices in some cities and the ongoing strength of lending to investors in housing assets convinced the board to continue watching the housing sector closely.
“It would be important to assess the effects of the measures designed to reinforce sound residential mortgage lending practices announced by APRA (Australian Prudential Regulation Authority) in December,” the minutes read.
In December, APRA announced policies to address housing risks in the domestic economy, including the “clarification of prudential expectations on what constituted acceptable growth in housing lending to investors and the possible steps that would be considered if APRA's expectations were not met, such as increased capital requirements.”
“Activity and prices in the housing market had continued to be bolstered by the low level of lending rates and strong population growth. Housing price inflation had moderated from the rapid rates seen in late 2013, but remained high and in Sydney and Melbourne had been well above the growth rate of household income,” the minutes stated.
"Growth of owner-occupier housing credit had remained around 6% in year-ended terms, while investor credit had continued to grow at a noticeably faster rate.”