It will take a while for the financial regulator's reforms to slow the number of housing loans being taken out by investors, the Reserve Bank says.
Investors have been driving housing demand in recent years, particularly in Sydney and Melbourne, pushing home price rises to record levels.
In NSW, investor loan growth has risen 150 per cent in the past three years and now accounts for almost half the value of all housing loan approvals in Australia's largest state, the RBA said in its bi-annual Financial Stability Review on Wednesday.
But, the bank is optimistic that the Australian Prudential Regulation Authority's (APRA) intervention in the home loan market will be enough to blunt any risk to the wider economy - but warns it is a big job.
"It is too early to expect a material slowing in investor loan approvals or credit growth in repose to APRA's measures, partly because there was already at large pipeline of pre-approvals already agreed when the measures were announced," the Reserve Bank said.