RBA should not be "too heavy handed" towards real estate market: Bill Evans

The RBA will need to be careful not to be too heavy handed when it comes to any measures to limit the real estate boom, Westpac economist Bill Evans has said. "A repeat of the experience of 2018–2019 when Sydney (–15%) and Melbourne (–11%) dwelling prices deteriorated sharply with the unintended consequence of slowing the economy overall will need to be avoided," Evans said. "For Australia, a period of very low official rates will always risk financial instability in the housing market," he noted "The RBA Governor, with good reason, currently sounds relaxed. "The emphasis is on housing credit growth where he notes, “investor and business credit growth remain weak.” "But the warning that “Lending standards remain sound and it is important that they remain so.” is an addition to earlier statements and really summarises the Board’s approach to the current housing boom," Evans noted after the latest RBA minutes were released. "The RBA has successfully slowed housing markets in both 2015 and 2017 using these “various tools” without needing to raise rates. "It seems reasonable that another round of such policies can be expected sometime in 2022 but the authorities will need to be careful not to be too heavy handed," Evans said.