THE Reserve Bank has left official interest rates on hold while signalling it believes the East Coast property boom may be at an end.
Following its monthly meeting today, the bank left the cash rate at 1.5 per cent. The last time the bank changed interest rates was in August last year.
A key concern for the bank has been the lift in house prices, particularly in Sydney and Melbourne.
But governor Philip Lowe said while price had increased there were signs they were slowing.
“Conditions in the housing market vary considerably around the country. Prices have been rising briskly in some markets, although there are some signs that these conditions are starting to ease,” he said.
“In other markets, prices are declining.
“In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years.”
Dr Lowe said rent increases were at the slowest in 20 years while housing debt was still out-pacing housing incomes.
“The recent supervisory measures should help address the risks associated with high and rising levels of indebtedness,” he said.
Today the Fair Work Commission lifted the minimum wage by 3.3 per cent.
But Dr Lowe and the RBA believe wider income growth is likely to be muted for some time yet.
“The various forward-looking indicators point to continued growth in employment over the period ahead. Wage growth remains low and this is likely to continue for a while yet,” he said.