RBA pinpoints Melbourne and Sydney as strong, but muted price trends elsewhere: RBA May 2015 minutes

RBA pinpoints Melbourne and Sydney as strong, but muted price trends elsewhere: RBA May 2015 minutes
Jonathan ChancellorDecember 7, 2020

RBA members discussed the potential risk that low levels of interest rates could foster imbalances in the housing market at its May meeting.

While concerned about the very strong pace of growth of housing prices in Sydney, and observing that conditions in Melbourne were strong, members saw much more muted trends in other capital cities.

As at previous meetings, they acknowledged the risks that could accompany a sustained increase in leverage from already high levels, should that occur, and that the expansionary effects of lower interest rates could be less than in the past.

On the data available for this meeting, however, it did not appear that the growth of housing credit, either for investment or owner-occupancy purposes, had been increasing over recent months.

The Bank minutes indicated it would continue to work with other regulators to assess and contain the risks arising from the housing market.

Members noted that the inflation forecast had been revised down slightly since February, reflecting the expectation that growth of economic activity would remain below trend for a little longer than previously forecast.

Domestic labour cost pressures were expected to remain well contained and underlying inflation was expected to remain consistent with the inflation target over the forecast period.

Headline inflation was forecast to remain below 2 per cent in year-ended terms through to mid 2015, before picking up to be consistent with the inflation target thereafter.

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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