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Property prices to rise slowly

The housing boom is over, says the RBA.

The cost of houses in Australia is set to grow more slowly in the future as the country's housing boom is over, according to the Reserve Bank of Australia (RBA).

In a speech to the Citibank Property Conference yesterday (April 23rd), the bank's head of financial stability Luci Ellis explained the low-inflation driven boom of the late 1990s and early 2000s has now come to an end.

Ms Ellis noted the rapid rise in Australian house prices during the course of this period was due to the increased availability of mortgages.

She said the new move to a low-inflation environment seems to have run its course, adding: "It also takes time for this additional borrowing capacity to bid up housing prices. But the transition does end after a while and it is our assessment that it has now ended."

The Real Estate Institute of Australia recently called for the RBA to consider cutting interest rates further in the wake of new inflation figures showing a 0.4 per cent rise.

Posted by Ravin Chatlani

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