RBA boss Dr Philip Lowe warns on low population growth impact on housing

The Reserve Bank of Australia governor Philip Lowe has warned that "history suggests that shifts in population growth can have large effects on the housing market." It was his bluntest warning yet about the dangers of the current house price boom across most of the country. The RBA boss affirmed the financial regulators were "watching carefully" to see if home lending restrictions were necessary while giving a speech at the Australian Financial Review's Business Summit. "There are many moving parts at present," he noted. "Record low interest rates; a shift in preferences towards houses and away from apartments; strong demand for housing outside our largest cities; large government incentives for first-home buyers and home builders; and the slowest population growth in a century," he observed. "Time will tell as to how these various factors ultimately balance out, but history suggests that shifts in population growth can have large effects on the housing market." "At its recent meetings, the board has discussed developments in the housing market, including the rising housing prices across most of the country. "Looser standards would increase medium-term risks and add to the upward pressure on prices, so would be of concern," he advised. Lowe said he recognised that low interest rates were one of the factors contributing to higher housing prices "and that high and rising housing prices raise concerns for many people." "I would like to reiterate that the RBA does not target housing prices, nor would it make sense to do so. "I recognise that low interest rates are one of the factors contributing to higher housing prices and that high and rising housing prices raise concerns for many people. "There are various tools, other than higher interest rates, to address these concerns, leaving monetary policy to maintain its strong focus on the recovery in the economy, jobs and wages," he noted.