RBA Says Low-Rate Led Home Price Gains Won’t Last Forever

The Reserve Bank of Australia said an upswing in property prices fueled by record-low interest rates can’t go on forever and lenders should avoid relaxing standards to boost profits.

“While rising housing prices and greater household borrowing are expected results from the monetary easing that has taken place and are helping to support residential building activity, they also have the potential to encourage speculative activity,” the RBA said in its semiannual financial stability review in Sydney. “It is important for both investors and owner-occupiers to understand that a cyclical upswing in housing prices when interest rates are low cannot continue indefinitely.”