A board member of the Reserve Bank of Australia has poured cold water on the idea that escalating Australian house prices are leading the market towards a "crisis".
Speaking to the US press, RBA board member John Edwards attempted to quell any rumours that Aussie property is approaching a crisis.
Figures released from RP Data last week found apartment and housing sales nationwide have hit their highest level in years, with a 10.4 per cent increase in house sales during the 2013/2014 financial year when compared to the same time last year, and an 8.6 per cent increase in apartment sales when compared to the same period.
Mr Edwards dismissed claims that the property market is becoming overheated and said housing credit growth, high household debt and weak income growth would "tame" prices.
“It is not anything approaching a crisis,” Mr Edwards said, adding the RBA would continue to monitor house prices as it was “not obvious how far this can run”.
Chief economist of the Master Builders Association Peter Jones recently told Real Estate Business approvals for freestanding houses nationwide had increased by 14 per cent and apartments were up by a more conservative 6.3 per cent, seasonally adjusted. Purchases were generally buoyed by a combination of low interest rates, strong population growth and previous underbuilding.
A recent report by the Bank for International Settlements, based in Switzerland, found Australian home prices were 50 per cent higher than usual relative to rents.
In the latest quarterly update, BIS analysts said out of the 14 advanced economies studied, only the UK has house prices that come close to matching Australia and Norway for inflation-adjusted growth over that period.