The Reserve Bank’s housing headache

The resurgent housing market is increasing attention on the Reserve Bank ahead of next week’s Monetary Policy Statement and the Bank’s six-monthly Financial Stability Report at the end of November. It has become increasingly obvious over the last few months that the massive monetary stimulus implemented by the Bank, along with the removal of loan-to-value ratio restrictions, has been a key contributor to the housing market’s renewed momentum. Questions are now being asked about how the Bank will respond to the market’s unexpected revival.