Reserve Bank of Australia deputy governor Guy Debelle says while high house prices are a legitimate concern,the bank remains committed to low interest rates.Credit: Alex Ellinghausen
House prices have accelerated in recent months,with the official cash rate sitting at 0.1 per cent and most commercial banks offering mortgage rates of less than 2 per cent.
Since the start of the year,house prices have jumped 11.2 per cent in Sydney and 7.1 per cent in Melbourne. Regional house prices have also accelerated,with prices in regional Tasmania climbing 16.6 per cent over the past year.
The situation has got to a point thatbanks are struggling to process the number of mortgage applications coming through the door,while mortgage brokers are reporting strong demand,including from people who have successfully bid for a house at auction before locking in funding.
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Dr Debelle said rising house prices were evidence of the way low rates were working through the economy. They encouraged home building that helped boost activity and employment.
He said while there were legitimate equity concerns about house prices,ultimately those issues were outside the purview of the RBA.
“The bank recognises that rising housing prices heighten concerns in parts of the community,” he said. “Housing price rises can have distributional consequences. That is certainly an issue that needs to be considered and there are a number of tools that can be used to address the issue.