Housing revival making investors wealthier: RBA

The revival of the housing market is once again helping Australians become wealthier, the RBA has noted in its latest Financial Stability Review.

“Households’ net wealth has been rising recently due to the recovery in housing and other asset markets as well as continued higher saving and borrowing restraint,” says the RBA in the March paper.

The paper also notes the continued preference for households to reduce their debt and make extra mortgage repayments to create a buffer and a reduction in overall financial stress.

“Many households still prefer to repay existing debt rather than take on new debt, which has contributed to the slower pace of household credit growth and an increase in mortgage prepayment buffers.

“Debt-servicing capacity has also been boosted by lower interest rates.

“Despite the unemployment rate having drifted up a bit over the past year, housing loan arrears and other aggregate measures of financial stress in the household sector remain low.

“Household indebtedness and gearing are nonetheless still at historically high levels, and hence continuation of the household sector’s more prudent approach to borrowing would assist in strengthening the sector’s financial resilience,” says the RBA.

This article first appeared on Property Observer.