Panicked buying in decline, but 2016 price direction imprecise: RBA governor Glenn Stevens

Panicked buying in decline, but 2016 price direction imprecise: RBA governor Glenn Stevens
Panicked buying in decline, but 2016 price direction imprecise: RBA governor Glenn Stevens

The Reserve Bank of Australia governor Glenn Stevens has confirmed one of big concerns over the past year has been resolved.

He suggests official measures have held back the panicked buying that had been fuelling the property boom in Sydney following tougher lending rules imposed by the Australian Prudential Regulatory Authority which seemed to be working. 

"It had to happen," Mr Stevens told The Australian Financial Review which has published its annual interview with the RBA Governor. The interview suggests a level of comfort with the economy in the near term and that the RBA seems content to retain rates on hold.

He noted CoreLogic RP Data's price dip over recent months.

"I think that's welcome because an ongoing rapid pace of price increase, I think, leads to dynamics in the economy that are ultimately unhelpful – the possibility of people, you know, almost buying in panic, stretching their balance sheet and so on.

"So I think what we've seen is that things have calmed down a bit.

"I think that's welcome."

The newspaper said the central banker wasn't just worried about Australians taking on more debt than they could repay if interest rates rose as he was also concerned that housing was becoming too expensive for many.

"The pace of growth that we had – you can't keep going at that pace without new stimulus coming into the market from somewhere because the affordability levels just get out of reach for people unless we keep cutting interest rates which we're not doing right at the moment, obviously," he told The Australian Financial Review

He suggested Melbourne's market "retains a little more buoyancy" than Sydney, but declined to predict where capital city prices would go in 2016.

"So I'm happy with the way those things have worked out thus far, but what happens from here, you know, you can't tell.

"You can't pick that," he said.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

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