The Reserve Bank is still concerned about lending standards in the home loan market despite the recent crackdown on loans to investors.
“The risks surrounding housing and mortgage markets seem higher than average at present,” the Reserve Bank said in its bi-annual Financial Stability Review on Friday.
The central bank said Australian Prudential Regulation Authority’s (APRA) tightening of lending standards has slowed investor demand for housing which has seen prices soar in the nation’s two largest cities, but there is still some way to go.
The RBA added that the recent scrutiny of home loans has revealed that the level of investor activity was higher over recent years than had originally been thought.
House prices are still rising strongly in Melbourne and Sydney, but price falls in centres such as Perth and Townsville have fuelled fears of a downturn in 2016.