There is a very strong possibility that there will be another interest rate rise due to the fact that a senior Reserve Bank official stated that Australia has entered a new upswing that would establish a foundation for years to come.
Ric Battellino deputy governor of the RBA stated at a housing conference in Melbourne that Australians could afford to maintain the payments on their mortgages despite higher house prices.
He further suggested that Australia's housing shortage was a big challenge for the economy but that it was at odds with a high level of housing investment.
Mr. Battellino went on further to state that this was due to a lot of investment going toward improving the quality on existing homes, building second homes or holiday houses.
The governor stated that many first-home buyers were finding it tough to enter the housing market, but pointed out that people already in the market were able to cope with mortgage repayments better than Americans.
The Australian Bureau of Statistics revealed a jump in public sector building had lifted overall construction work a surprise 2.2 per cent in the September quarter.
Economists are predicting that due to the RBA's deputy's comments there will most likely be a interest rate rise next week. It is estimated that the rise will be another 25 basis points.
Mr. Battellino said that the economy only recently entered a new upswing, and that is it was most likely that we would see this growth extend for a few more years.
The global economy is clearly growing again after some severe falls in activity late last year and early this year.
Mr. Battellino also stated that the ratio of house prices to income was much higher now than 20 years ago, mainly because a fall in inflation had brought interest rates down and allowed people to take out bigger home loans without increasing their loan repayments.