The Minutes of the February 2015 Monetary Policy Meeting of the Reserve Bank Board show unanimous agreement among its members that a close eye will be kept on future developments in the housing market.
Reasons given were the large increases in housing prices in some cities and ongoing strength in lending to investors in housing assets.
The Australian Prudential Regulation Authority
(APRA) had announced several policy measures in early December to address housing risks in the domestic economy.
According to the minutes, members noted “it would be important to assess the effects of the measures designed to reinforce sound residential mortgage lending practices announced by APRA in December.”
These policies included “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. “
The minutes state that “activity and prices in the housing market had continued to be bolstered by the low level of lending rates and strong population growth” and predict further growth of dwelling investment in the near future, indicated by residential building approvals.
“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.
"Growth of owner-occupier housing credit had remained around 6 per cent in year-ended terms, while investor credit had continued to grow at a noticeably faster rate.”
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