Property investors are dominating the housing market, but at least rising house prices are encouraging people to spend more money, the Reserve Bank of Australia says.
The central bank appears less concerned than it has been in recent months about the growth in dwelling investment, when it flagged regulations to curb investor activity in the housing market.
In the minutes of its November board meeting, released on Tuesday, the RBA said property investment growth remained strong and although house price growth had slowed from last year's rapid pace, prices were still high in Sydney and Melbourne.
The RBA said rising house prices were adding to household wealth at a time when wages were growing slowly, encouraging people to spend more money.
"Members noted that the strength in the housing market was expected to give some support to household consumption in the near term as rising housing valuations allowed some credit-constrained home owners to bring forward their consumption," the RBA said.
Earlier this month, the central bank kept the official cash rate at its record low of 2.5 per cent for the 15th consecutive month.
The central bank also said the Australian dollar remained above most estimates of its fundamental value, while global growth concerns weighed on international bourses.
Despite significant falls in commodity prices since January - a key driver of the exchange rate over the long term - the Australian dollar was higher at the end of October against the currencies of Australia's trading partners, the RBA noted.
"Despite the recent appreciation of the exchange rate, the Australian dollar remained above most estimates of its fundamental value, particularly given the further declines in key commodity prices over the course of the year to date," the RBA said.
"As a result, the exchange rate was offering less assistance than would normally be expected in achieving balanced growth in the economy."
This was cited in the minutes as one of the considerations for the RBA's decision to keep interest rates on hold.
The board also said that share prices in the advanced economies fell sharply early in October, reflecting concerns about global growth.
However, it noted markets "had generally recovered those losses by the end of the month, with share prices in both the United States and Japan reaching multi-year highs."