Australia’s central bank is becoming more concerned with the state of the national property market, amid a leap in investment borrowing and strong price growth in the nation’s most populous cities.

The Reserve Bank of Australia, in the minutes from its March policy decision, also showed it was still difficult to assess the health of the domestic labour market, but overall gave few hints it was considering cutting official interest rates in an effort to support the economy.

The RBA said “recent data continued to suggest that there had been a build-up of risks associated with the housing market”. That language has not been used by the bank in recent times and conveys more concern than had been present in the bank’s February minutes. The central bank reiterated that “prices were rising briskly” in some markets – a reference to Sydney and Melbourne – but were declining in others.

Amid concerns that macroprudential measures introduced in 2015 are no longer working as effectively as they were last year, the federal government is expected to use its upcoming May budget to reveal a series of measures designed to boost affordability for actual home buyers and clamp down on those loading up on debt and buying multiple investment properties.

Paul Dales at Capital Economics thinks concerns about the housing market should eventually fade, but the dimming outlook for wage growth and inflation means the chances of future rate cuts are greater than markets anticipate.

There are some signs that the RBA is starting to wonder if inflation pressures are more subdued than it thought. This is one of the conditions that would be necessary to trigger further rate cuts. The other is an easing of its financial stability concerns. The strong housing market shows that’s not happening yet, but the recent rises in mortgage rates and talk of tighter constraints on lending suggests that housing will end the year weaker than it started it.

The yield on 10-year Australian government bonds, which move inversely to price, was down 2.5 basis points at 2.798 per cent, while the Australian dollar sat 0.1 per cent weaker at $0.7723.

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