Barclay's chief economist Kieran Davies says housing valuations are “flashing red” as Australian household debt has hit a record 177 per cent of annual disposable income, The Australian Financial Review reports.
“House prices now equate to 4.3 times annual income and 28 times annual rent, both within a fraction of their historic highs,” Mr Davies said, according to the newspaper.
Mr Davies said he believed the Reserve Bank of was concerned about the strength of the the housing market, "where the evolution from recovery to boom has brought jawboning by the governor into play."
“We’re paying more attention to house prices and credit than the currency to see if the RBA changes its mind on macro-prudential tools [which limit lending growth] to gauge if housing strength could trigger a rate rise this year," he said according to the AFR.