interest rate

Reserve Bank governor Philip Lowe warns on house price boom

PHOTO: RBA governor Philip Lowe says the board is keeping a close eye on the booming housing market.

The Reserve Bank has issued its bluntest warning yet about the dangers of the latest house price boom, and the possibility regulators may step in to deflate it.

Speaking at the Australian Financial Review’s Business Summit, Mr Lowe confirmed that the recent rise in house prices across most of the country — to record levels in many areas — had been a topic of discussion at recent RBA board meetings.

In a veiled warning to home buyers, Mr Lowe cautioned that the prospect of lower population growth over the next couple of years could outweigh some of the other factors driving prices higher.

“There are many moving parts at present: record low interest rates; a shift in preferences towards houses and away from apartments; strong demand for housing outside our largest cities; large government incentives for first-home buyers and home builders; and the slowest population growth in a century,” he observed.

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