-Luci Ellis, RBA's head of financial stability
Australian economy used to rely on the mining sector for decades. Strong investment in the resource-rich economy helped it to expand at a steady pace even during the global financial crisis. Nonetheless, the investment inflow is waning and both policymakers and politicians are looking forward another sector that can offset a decline in business investment. Housing market was projected to become that driver, however, the latest comments are diminishing hopes for the long-term boost.
During the speech at the CITI Residential Housing Conference a head of financial stability Luci Ellis warned out that property prices are being touted as a thing of the past year by the central bank, because of tougher lending standards. It means there will be more periods ahead, where price will fall. Ellis also claimed that first home buyers should not take on too much debt to buy the house, citing the cyclical development of the property market. It is expected that house price growth will not return to the boom-time gain seen between 1990s and 2000s. Since then, domestic banks have become more cautious in their assessments of how mortgage lenders are going to cope with higher interest rates. In general, the RBA believes the housing market is in the good shape and what is more important, household finances still look healthy.
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