Hysteria on housing risks lessening: Westpac's Bill Evans

Westpac's chief economist Bill Evans says yesterday's Reserve Bank Board minutes continued to provide a generally downbeat assessment of the Australian economy.

He noted the bank rightly focusses on potential for a lift in household spending.

"The growth outlook is a little less optimistic while there appears to be less hysteria around the potential risks associated with the housing market.

"Indeed there is no implication of a substantial intervention by the authorities."

Evans says the boost to house prices is "seen to be a positive" and it points out that retail sales have been stronger in those statements with more house price growth.

"However, they do point out that expectations for low income growth may weigh on consumption.

"In that regard the Westpac Consumer Sentiment Index component index tracking consumers’ assessments of their finances relative to a year ago has fallen by 15.7% year.

"While credit extended to investors in housing is noted to have continued to grow at a noticeably faster pace than credit to owner-occupiers the concerns around imbalances in the housing market appear to have possibly eased.

"Certainly it is pointed out that house price inflation has slowed and whereas in the October minutes discussions between the Bank and APRA on banks’ lending standards are specifically referred to these minutes are silent on that issue."