Investors test the RBA's homing instinct

The Reserve Bank has a fairly rosy outlook for housing in the near term, but house prices and net wealth are likely to take a big hit when investor demand is exhausted.

Although house prices are booming and housing credit is on the rise, the Reserve Bank of Australia does not believe that housing poses a near-term risk to financial stability. In its opinion, households continue to act in a prudent manner, displaying a cautiousness that was not present a decade ago.

In the Financial Stability Review, the RBA paints a pretty rosy picture for the household sector over the past six months, characterised by rising net wealth, high savings and stable debt ratios.

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