RBA Governor Glenn Stevens says the slowing property market is good for the Aussie economy

In his annual interview with the Australian Financial Review, RBA Governor Glenn Stevens has described the slowing Sydney and Melbourne property markets as a needed and welcome change.

Stevens said that RBA data suggests that the fire has come out of the housing market in Sydney and Melbourne, especially the former, promising lowered prices for Australian buyers.

He said of the change, “I think it had to happen. The pace of growth that we had – you can't keep going at that pace without new stimulus coming into the market from somewhere because the affordability levels just get out of reach for people unless we keep cutting interests rates, which we're not doing right at the moment, obviously.”

A slowdown in the market was inevitable, “unless you keep getting new buyers from offshore or financial things that allow people to gear up more” - the latter including a lowered cash rate.

This month the RBA kept the official cash rate steady at 2% for the holiday season, which was good news for those with home loans. Stevens said the cash rate would be lowered again ‘if that’s helpful’ but stressed that he didn’t think it would be a desirable thing for the property market if it did.

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He declined to comment on the direction the market might take in the future, saying "I can't make a forecast of that. I do think, though, that a market where we're not getting panicked buying, where people have time to just think about what's a reasonable price and what isn't and where they take some care with their financial structure and where the lenders are taking a bit more care with standards, I think that's a better world than the one we were in."

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