Low interest rates could cause property prices to rise

Analysis by the Reserve Bank of Australia suggests house values could jump 30 per cent over three years if borrowers believe the cut in interest rates is permanent. An internal RBA document released on Friday in response to a Freedom of Information request says that while the RBA is on alert for current ultra-low borrowing costs inflating a credit-fuelled asset bubble, so far, the central bank believes lending standards are prudent.
While our financial regulators are ready to act if necessary, apparently they don’t see rising house prices as a major risk.