The Reserve Bank has left its key interest rates unchanged at its monthly board meeting as widely anticipated, but it has warned that it is keeping a watchful eye on developments in the housing market.
RBA governor Philip Lowe said housing markets have strengthened further, with prices rising in most jurisdictions, while housing credit growth to owner-occupiers has picked up, with strong demand from first home buyers.
"In contrast, investor credit growth remains subdued," Dr Lowe said in a statement following Tuesday's meeting.
"Given the environment of rising housing prices and low interest rates, the bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained."
Recent figures show house prices have grown at their fastest pace in 32 years, while home lending and building approvals are at, or close to, record highs.
Property researchers CoreLogic said on Tuesday that 874 homes were taken to auction over the weekend, making it the busiest Easter on record.
BIS Oxford Economics senior economist Sean Langcake expects the RBA will leave any policy response to the Australian Prudential Regulatory Authority if conditions become concerning.
Dr Lowe said the the board remains committed to maintaining highly supportive monetary conditions until its goals are achieved, reiterating the bank would not increase the cash rate until inflation was sustainably within the two to three per cent inflation target.
For this to occur, wages growth will have to be materially higher than it is currently, which will require significant gains in employment.
"The board does not expect these conditions to be met until 2024 at the earliest," Dr Lowe said.
The cash rate has stood at 0.1 per cent since November.
So too has the central bank's three-year bond yield target, aimed at keeping rates low, and its term funding facility rate, which assists banks lend to business.
Its huge bond buying program continues, which also aims to keep borrowing rates low, with its initial purchase of $100 billion in government bonds almost complete and the second tranche of $100 billion due to start next week.
"The Bank is prepared to undertake further bond purchases if doing so would assist with progress towards the goals of full employment and inflation," Dr Lowe said.
The RBA will also release its twice-yearly financial stability review later on Friday, which may garner more interest than usual in regard to the housing sector.
Meanwhile, businesses still seem keen to take on workers, despite the uncertainty caused by the end of the JobKeeper wage subsidy.
Job advertisements rose by a further 7.4 per cent in March, building on an upwardly revised 8.8 per cent increase the previous month.
Job ads are now at their highest level since November 2008 and point to further sharp declines in the unemployment rate.
Treasury estimates up to 150,000 people will lose their job as a result of JobKeeper winding up.
"We think net employment losses will be smaller, as growing labour demand elsewhere should mean many workers find a new job relatively quickly," ANZ senior senior economist Catherine Birch said.
Ms Birch expects a temporary rise in the jobless rate over the next few months, before it resumes a rapid downward trajectory in the second half of the year.
Australian Associated Press