Glenn Stevens warns house prices can fall

The RBA governor Glenn Stevens yesterday acknowledged the RBA had been paying quite a bit of attention to what's been happening in the housing market. 

He says the bank focuses not just on prices, but also on housing credit, adding that APRA's regulatory curbs on investment lending have worked effectively in parts of the market that were showing signs of "exuberance".

Stevens noted that households are managing the record levels of debt "quite well".

But he warned that investing in housing isn't a one-way bet, saying house price can also fall.

"The assumption that there is an easy road to riches through the leveraged holding of real estate, that is not a great strategy," he remarks at the Trans-Tasman Business Circle boardroom briefing in Sydney.

"While I've been in this job we've seen them (house prices) fall two or three times."

The ABC noted the Reserve Bank governor warning that the next government faces years of hard budget repair work, and inflation will be difficult to lift.

Asked about his views on Treasury's economic forecasts versus the bank's own predictions, Mr Stevens said there was little difference between them.

However, he also warned that whichever party is elected on July 2 faces a long and difficult task of budget repair.

"The budgetary situation will be OK if nothing else goes wrong, but you can't really assume in life that nothing will go wrong over an extended period.

"So I suspect that there's quite some years of hard repair work ahead for whoever is the government over the period ahead."