Parts of the real estate industry have already warned about failed settlements as record numbers of new apartments come due for completion in Sydney, Melbourne and Brisbane this year and next.

The warning, which is accompanied by graphs showing dwelling approvals retreating from a peak and house prices levelling out, appears to have been prepared ahead of more recent evidence of a rebound in both measures.

Recent strong rebounds in home values are creating fresh problems for the Australian Prudential Regulation Authority, which is tasked with ensuring lending stays prudent at the very same time as record-low interest rates are stimulating it.

After reporting a rebound in house price growth – with Sydney up 6.6 per cent in the three months to May – CoreLogic's head of research Tim Lawless cited "anecdotal reports" that investor borrowing had risen again after initially being dented by APRA-led moves to rein in lending to non-owner occupiers.

Economists say this is likely to force the regulator into taking fresh steps to head off another surge in borrowing.

HSBC chief economist for Australia and NZ Paul Bloxham said on Thursday: "The turning up of the dial on prudential settings over the last 18 months has seen some cooling in housing market activity over that period, but you could also argue the revival of exuberance in Sydney in the past couple of months may mean more measures need to be put in place."

Seductively low rates

Economist Saul Eslake, who criticised the Reserve Bank's May reduction in rates to "inappropriately low" levels, says APRA's job is being made harder by the fact that it has to stem appetite for credit stimulated by the lowest lending rates on record


"One of the ways in which inappropriately low interest rates are damaging is by encouraging and facilitating excessive risk taking on the part of both borrower and lenders," he said. "Borrowers can be seduced into borrowing more than they can service.

"Lenders can be seduced into lending too much to people but also into lending to the wrong sorts of people because they can't get what they regard as acceptable rates of return on low-risk loans in a low-rate environment."

While the OECD expressed growing confidence the post-resources boom transition is strengthening – with services exports overtaking mining exports – it also forecast that government debt would continue to inflate, reaching 47.6 per cent of gross domestic product in 2017.

At the same time, it warned that budget repair should be delayed "in light of economic uncertainties".