Australia's tale of 3 cities highlights RBA loan curbs dilemma

Sydney

AUSTRALIA'S property market is showing signs of a new two-speed economy. Prices along the nation's east coast are still surging, while the rest of the country declined last month, RP Data's CoreLogic Hedonic Home Value Index showed on Monday.

The housing market has been pumped up by the Reserve Bank of Australia keeping its benchmark interest rate at a record-low 2.5 per cent for 15 months, with home loans to property investors in September growing at the fastest since 2008.

Demand for higher-risk mortgages, including interest-only loans, have prompted regulators to review tools to cool lending and avoid a jump i…