Too Early to Call a Property Boom

September 26th, 2013

The Reserve Bank has rejected claims that falling interest rates are fuelling a property bubble as the rest of the economy slows.

Housing prices, auction clearance rates and loan approvals have all been improving over the past few months. Some analysts are concerned that this growth has been driven by investors rather than people buying property to live in.

The Reserve Bank said it was alarmist to describe every above-average increase in house prices as a property bubble.

The bank is pleased with the growth in the housing sector and believes it can lead wider economic growth as it has in previous booms. The bank is seeking to stimulate growth as the mining boom slows down, threatening rising unemployment. It left interest rates steady at 2.5% at its latest meeting on September 3rd. It intends to keep this position until further data emerges about the health of the economy.