AUSTRALIAN HOUSE PRICES RISING "TOO QUICKLY"

       Australian house prices may suge too rapidly, hurting low-income families seeking to buy or rent homes, says Anthony Richards, head of economic analysis at the Reserve Bank of Australia.
       "Looking forward, the risk is that we might move toward undesirably strong growth in Australian housing prices," Richards told a housing conference here.
       "This raises a number of concerns, which seem to be widely shared in the community."
       Australian house prices rose 4.2 per cent in the second quarter from the previous three months, the first increase in five quarters, helped by the lowest borrowing costs in half a century and government grants to firsttime buyers.
       Richards said it was "increasingly clear" that Australia had avoided the large drops in property prices seen in other countries.
       "This is a good thing, because of the macroeconomic difficulties that have accompanied those price falls in some countries," Richards said.
       Still. "when the price of housing rises, higher-income households tend to benefit at the expense of lowerincome households," he said. "As a nation, we are not really any richer when the price of housing rises, but the move vulnerable tend to be hurt.
       "We are in a situation where we would not want to see very strong growth in housing prices - that would be unhelpful from a social perspective."
       Eighty-four per cent of investors are now expecting reserve bank governor Glenn Stevens to boost the overnight cash rate target in November by a quarter point to 3.25 per cent, according to interbank futures on the Sydney Futures Exchange.
       While the affordability of housing has improved this year, it will deteriorate when the central bank begins raising the overnight cash rate target from its 49-year low of 3 per cent.
       "As the bank has noted on a number of occasions, it is not reasonable to expect that interest rates will stay at the current low levels indefinitely," Richards said. "When they do rise toward more normal levels, discussions on housing affordability will again focus more on the level of housing prices relative to income."