Australia's housing market is about to take off, the RBA says, and rising prices and interest rates could hit affordability hard.

The RBA’s Tony Richards issued the warning at the Committee for Economic Development of Australia’s housing forum, and said that the nation was still not building enough houses to keep up with levels of demand that were driven by population growth.

Richards also warned policymakers in Canberra that governments needed to do more to stop “undesirably strong growth” in housing prices as the economy improved.

'It is looking increasingly clear that Australia has avoided the large falls in housing prices seen in some other countries over the past two years or so,' he said today.

The Australian