The Reserve Bank has used its semi-annual financial stability report to reiterate the risks of “speculation” to housing investors and lenders.
The bank said that stronger activity in the housing market, particularly by investors, can be a signal of “speculative demand which can exacerbate property price cycles and encourage unrealistic expectations of future housing price growth among property purchasers”.
“It is important for investors and owner-occupiers to understand that a cyclical upswing in housing prices when interest rates are low cannot continue indefinitely and they should therefore account for this in their purchasing decisions,” the RBA said.
The Reserve Bank in its report mentioned several factors for the rise in investor home loans, such as the reduction in state grants to first-home buyers and the way banks assess loan serviceability that works against first home buyers.
Source: RBA