Property prices roll back to 2002 and may fall further

Australia’s property market is becoming more and more affordable, says Reserve Bank chief Glenn Stevens.

While various property analysts claim house prices are now too expensive for many Australians, the RBA governor reports there is no affordability crisis.

"Scaled to measures of income, Australian dwelling prices on a national basis have in fact declined and are now about where they were in 2002," said Mr Steven in a speech yesterday. 

"That is, housing has become more affordable.

"Four or five years ago we supposedly had a housing affordability crisis. Now it seems that the problem some people fear is that of housing becoming even more affordable."

The RBA chief did admit that house prices rose dramatically in the 10 years following 1995 in an address, titled The Lucky Country, in support of the Anika Foundation.

Related: We should build on our luck: RBA's Stevens

Mr Stevens then went on to say that housing prices could continue to fall and commented that it would be risky to assume that they wouldn’t.

"It is a very dangerous idea to think that dwelling prices cannot fall," said Stevens. "They can, and they have."

"We should never say a crash couldn't happen here, and the Reserve Bank continues to monitor property markets and the performance of mortgages quite closely," said Mr Stevens.

While local property prices have fallen 5 to 10 percent from their peak here, this compares with a stunning 30 per cent decline in US property prices and a significant drop in most European property markets.

Related: Is Australia's housing driven wealth boom over?

The RBA chief however didn’t see much evidence that an Australia’s property bubble was about to burst.

"It has to be said that the housing market bubble, if that's what it is, seems to be taking quite a long time to pop - if that's what it is going to do."