* RBA sees 'build-up of risks' in housing market
* Futures market sees no chance of rate cut this year
* RBA would need major jobs, housing losses to cut - CBA
(Adds home prices, economists comment, FX level, changes slug)
By Swati Pandey
SYDNEY, March 21 Australia's central bank saw
growing risks in the nation's hot housing market when it left
rates steady earlier this month, underlining the case against
further easing in policy.
Housing affordability, or the lack of it, has become a
hot-button issue for the conservative government of Prime
Minister Malcolm Turnbull, which has promised measures to ease
the problem in its May budget.
Minutes of its March 7 meeting released on Tuesday showed
the Reserve Bank of Australia (RBA) were generally optimistic
about the A$1.7 trillion ($1.31 trillion) economy, which is
transitioning away from a decade-long boom in mining investment.
However, board members felt there had been a "build-up of
risks" in the housing market as borrowing for investment fuelled
brisk price rises in Sydney and Melbourne.
"The Australian housing market continues to cause much angst
around poor affordability and high household debt," said Shane
Oliver, chief economist at AMP Capital.
"Recent RBA commentary strongly hints that more
macroprudential measures to tighten lending standards are on the
way. This is in part about reducing the risks to financial
stability when it's too early to consider raising rates."
Data from the Australian Bureau of Statistics (ABS) on
Tuesday showed home prices rose 4.1 percent in the December
quarter, from the previous quarter, with Sydney up a red-hot 5.2
The pace has quickened even further this year. Figures from
property consultant CoreLogic showed prices were currently
growing at an annual 19 percent in Sydney, while gains across
the five capital cities amounted to 12.7 percent.
Much of that fever has been fuelled by borrowing for
investment properties, driving household debt up to a record 180
percent of disposable income.
RBA Governor Philip Lowe has argued there was little
economic benefit in lowering rates from an already low 1.5
percent if all it does is lift debt to levels that would impact
consumer spending power.
Data out recently showed retail sales in January grew at a
tepid pace for a third straight month, while the outlook for
capital expenditure remained uninspiring.
The RBA did note that tighter supervision had contributed to
"some" strengthening in lending standard by the banks, which had
also raised rates on some mortgage products recently.
With Lowe repeatedly arguing against cutting rates further,
financial markets have all but priced out the chance of
another cut this year. Some investors are even toying with the
idea of hike in early 2018.
"In our view, it would take a sustained loss of momentum in
job creation or a fall in dwelling prices for Lowe to entertain
the idea of taking the policy rate lower," said Gareth Aird,
senior economist at Commonwealth Bank.
"Neither outcome is in our central scenario and as such, we
see the RBA on hold over 2017 and well into 2018."
($1 = 1.2935 Australian dollars)
(Reporting by Swati Pandey; Editing by Sam Holmes)