There is "no disputing" housing is expensive, says the Reserve Bank of Australia's head of financial stability, but loosening lending standards to help first home buyers enter the property market would be "counterproductive".
RBA head of financial stability Luci Ellis said today it was helpful -- from a stability point of view -- that there had been no push to improve the position of first home buyers by easing lending standards.
"As recent experiences in other countries have shown, such a step would probably be counterproductive in the longer run," Dr Ellis told a House of Representatives standing committee on home ownership today.
Dr Ellis' comments come after a sharp rise in investor activity in Australia's capital cities, which has prompted concerns of a speculative property bubble in Sydney and Melbourne, which was partly blamed on the RBA's own stance on monetary policy.
"Investor interest in property has been especially strong in recent years, no doubt partly encouraged by low interest rates and the prospect of (concessionally taxed) capital gains," Dr Ellis said.
The resulting house price surge has "probably priced some aspiring first home buyers from properties they could otherwise acquire", she said.
The latest figures from CoreLogic-RP Data showed house prices had increased 11.1 per cent over the 12 months to July. In Sydney alone, dwelling prices had surged 18.4 per cent -- the fastest pace in 13 years.
Meanwhile, Melbourne home values rose 4.9 per cent in July, the fastest pace of growth in any month since the data set began in 1996.
CoreLogic said investors now made up more than 50 per cent of the buyers in the property market, and more than 60 per cent in New South Wales.
"Whether home ownership is affordable depends on one's definition and is open to debate," Dr Ellis said. "But there is no disputing that housing is expensive."
While easing lending standard for first home buyers may not be on the cards, Australian lenders, facing heat from the RBA and the Australian Prudential Regulation Authority, have tightened access to investor loans and hiked rates on their investor mortgages in recent weeks.
Dr Ellis said Australia was "a long way' from a mortgage-induced financial crisis, and said the RBA wanted to ensure it remained that way.
"We want to promote financial stability by making sure that Australians are generally resilient to the financial shocks that might come their way," she said. "How much they pay for housing and how they finance that purchase strongly influence their resilience."