Australiaâ€™s over-heated housing market could be starting to slow while rapid home construction in some areas is creating an oversupply, the central bank said in its semiannual assessment of risks to the countryâ€™s financial system.
â€œThere have been tentative signs of some slowing in the Sydney and Melbourne housing markets,â€ the Reserve Bank of Australia said Friday in its financial stability review. â€œWhile the housing market remains a long way from oversupply nationwide, some geographic areas appear to be reaching that point, particularly the inner-city areas of Melbourne and Brisbane.â€
Risks to Australiaâ€™s financial stability continue to revolve around property markets, with those surrounding housing and mortgage markets higher than average, the central bank said. Risks to the countryâ€™s banks have increased in the past six months, particularly in the area of commercial lending to property developers, it said.
The central bank cut its benchmark interest rate to a record-low 2 percent in May to revive an economy struggling with a transition from a waning mining boom. The low rates further spurred demand in the countryâ€™s housing market and regulators have been forced to clamp down on banksâ€™ loans to landlords while ensuring lending standards are maintained.
The RBA said that there are signs that these measures are starting to have an effect.