Watch on housing policy

lian Prudential Regulation Authority to rein in riskier lending practices would have little immediate impact on the market, Mr Fraser said yesterday.

“It takes time. You can’t be on the bridge saying ‘change course’ – it’s not like (you do) that and see the effects of a change in policy in a month’s time,” he said.

Addressing a Senate economics committee hearing in 2018 COMMONWEALTH GAMES HOST CITY Canberra, Mr Fraser said it was difficult to “design, let alone discern” the impact of monetary policy.

And Treasury’s attempt to improve home ownership levels for low-income Australians did not necessarily rely on bringing down house prices, he said.

“To say you’re going to go out and target house prices, well it’s a very detailed target with some very blunt instruments,” Mr Fraser said.

He acknowledged housing affordability was a major problem for many young families.

“I don’t take any joy that for many families these days, it’s bigger hurdle to jump than we’d imagined.”

His comments came after Standard & Poor’s last week downgraded its credit ratings on the nation’s second-tier mortgage lenders, warning that economic imbalances in Australia had increased in part due to the rapid rise of house prices.

CoreLogic figures yesterday revealed prices fell in Melbourne and Sydney during the week to May 28, but remained up 11.4 per cent and 10.9 per cent respectively over the past year.

Prices in both capitals have eased noticeably since March 31, when APRA ordered lenders to restrict interest-only loans to no more than 30 per cent of new residential mortgage lending.

Meanwhile, Mr Fraser said Australia’s economic recovery would gather pace over coming years as export volumes ramped up and household wealth increased.

Treasury also expected the domestic economy to rebound from a series of adverse weather events, that affected agriculture an tourism.