Strong growth of household indebtedness and housing prices has raised a range of financial stability concerns in Australia. While the main policy response has been to tighten lending standards, two quantitative portfolio benchmarks have also been used to help address the emerging macro-financial risks. These benchmarks have dampened activity in the types of loans targeted, though there are a number of questions around their use over the medium term. In particular, it is difficult to directly measure the effectiveness of these policies in addressing financial stability risks and hence to calibrate them accordingly. It is also important to consider whether there are undesirable consequences of such measures. More generally, the use of quantitative benchmarks to address financial stability risks is a relatively new policy approach in Australia and the practices are likely to evolve as more experience is gained.
|Title of host publication||Hot property|
|Subtitle of host publication||the housing market in major cities|
|Editors||Rob Nijskens, Melanie Lohuis, Paul Hilbers, Willem Heeringa|
|Place of Publication||Cham|
|Publisher||Springer, Springer Nature|
|Number of pages||11|
|Publication status||Published - 2019|
Bibliographical noteCopyright The Reserve Bank of Australia 2019. Version archived for private and non-commercial use with the permission of the author/s and according to publisher conditions. For further rights please contact the publisher.
Bullock, M., & Orsmond, D. (2019). Housing prices and financial stability: An Australian perspective. In R. Nijskens, M. Lohuis, P. Hilbers, & W. Heeringa (Eds.), Hot property: the housing market in major cities (pp. 195-205). Cham: Springer, Springer Nature. https://doi.org/10.1007/978-3-030-11674-3_17