Reserve Bank warns on property price bubble

Posted on September 20, 2013 by | 0 Comments

ELEANOR HALL: The Reserve Bank board today joined global financial authorities in issuing a warning about low interest rates having the potential to fuel a property price bubble.

In the minutes from its September meeting, the central bank mirrored today’s IMF warning and last week’s caution from the local regulator APRA that banks need to be vigilant about their lending standards.

The RBA has also warned about potentially risky property investments in self-managed superannuation funds.

Our business editor Peter Ryan has been at the RBA’s headquarters in Sydney’s Martin Place this morning and he joins us now.

Peter, the Reserve bank board is responsible for the low interest rates. Is it suggesting it’s taken rates too low?

PETER RYAN: Well Eleanor, it’s a very complex picture because the cash rate or monetary policy is a single tool that’s designed to change the economy or send the economy in a particular direction. And housing is just one area. But of course, housing is a risk, in particular in an era of record low interest rates – the lowest in 50 years – and also low inflation.

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