APRA and Big Four banks well placed to handle property price surge: IMF Bidders at the auction in Concord, Sydney, on Tuesday, after a weekend in which the city hit an 80.6pc auction clearance rate. THE International Monetary Fund has backed Australia's banks and regulators' moves to ensure the economy can handle the "price pressure" of the resurgent housing market. Amid a visit to Australia by several high-level IMF executives, the fund's deputy managing director Min Zhu today said the nation's strong financial system put the economy in good stead to navigate the roaring property market. "We've observed the housing price upsizes, particularly in the last 12 months," Mr Zhu, a Chinese national, told a Centre for International Finance and Regulation event in Sydney today. (But) particularly in Australia we see the whole financial sector as very healthy and the central bank has the proper measures to make sure the housing prices when they go up do not hurt the financial sector. This is the most important issue ... because we observed the constraints on the supply side in the Australian market for a while and we've observed increasing demand in the past few years, so there is price pressure there. Led by an 11.5 per cent surge in Sydney, capital city home prices are up almost 8 per cent in the past year to a median of $511,000, according to RPData. The acceleration in recent months has led to concerns the market could be heading towards a bubble and led to warnings from the Reserve Bank of Australia and the Australian Prudential Regulation Authority to the banks not to relax lending standards. The Big Four banks, which control about 85 per cent of the $1.3 trillion mortgage market, have downplayed talk of a housing bubble, but have conceded they must be alert to risks. A survey from mortgage broker Loan Market today showed 10 per cent of borrowers are comfortable borrowing up to 97 per cent of a property's value as the market runs "hot." The uptick in the housing market and the high Australian dollar has put the RBA in a bind, with another cut to official interest rates likely to add further fuel to property prices, while a rate hike would boost the currency. While the dollar has fallen below parity with the greenback, it has remained relatively high as the US Federal Reserve continues its massive stimulus program, dubbed quantitative easing, which is pressuring the US dollar. RBA assistant governor Guy Debelle said at the event today the RBA wanted "unconventional" policies such as QE to end, an event expected to see the dollar decline as investors buy the greenback. "In the end I think everyone should welcome and we would certainly welcome an exit from unconventional monetary policy and move back to a world where pricing is much more normal from the extremes it's been over a number of the past few years," he said.