CANBERRA, AAP – Reserve Bank of Australia governor Philip Lowe anticipates house prices will rise further, but says there are some factors that could start working the other way,

Figures released this week showed home values have risen over 16 per cent nationally in the past year, the fastest annual pace since February 2004.

“It is likely we will see further increases in the next little while,” Dr Lowe told the House of Representatives economics committee on Friday.

But he said it was a global story, with almost every city around the world facing rising house prices, largely because interest rates are low and are likely to stay low.

However, he said there are some factors that could start working in the other direction in Australia with population growth at its slowest in decades and the rate of new housing construction very high.

He said every day that prices go up, it was harder for people to afford a new home, so at some point price rises will come to an end.

“But I’m afraid I can’t forecast when that happens,” Dr Lowe said.

There has also been little sign of a deterioration in lending standards during this latest rapid rise in house prices.

“There are some banks which have marginally loosened up and others that have marginally tightened up,” Dr Lowe said.

“The lending standards that are being applied seem sensible and reasonable.”

He said Australia is not in a situation that was seen in the last decade where almost half the loans in the country were interest-only, which meant not one dollar of principal was having to be repaid on a regular basis.

“We are not seeing lending standards weaken,” he said.

If they did, he warned the Australian Prudential Regulation Authority or the RBA would take regulatory action.

Regulators would also be concerned if credit growth were to pick up materially from here and looked like staying at a higher level.

Dr Lowe said if double digit credit growth was sustained, while income growth was running at four or five per cent, that would be problematic.

“At some point APRA would be considering interventions,” he said.