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The Reserve Bank of Australia (RBA) governor Glenn Stevens has said he will not hesitate to raise interest rates if he sees a bubble forming in house prices.
In his address to the House Economics Committee on Friday, Mr Stevens said the RBA would raise rates if it saw that a bubble fuelled by debt was threatening financial stability.
Mr Stevens said he is wary of the risks to financial stability caused from a surge in asset prices.
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According to official data from the Australian Bureau of Statistics, house prices are still about 1.4 per cent below their peak a year ago, but recovered strongly in the June quarter, increasing by 4.2 per cent.
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