Australia's central bank assistant governor Chris Kent stated at an event that the softening of the Australian housing market is likely making financial conditions somewhat tighter than normal.

Home prices are being impacted by a range of factors, including rising interest rates, a reduction in government tax incentives for investors, rising living costs, and households' already heavy debt burdens.

Kent, who oversees financial markets at the Reserve Bank of Australia, noted that changes in tax policy appear to have led to a decline in demand for existing homes.

"All else being equal, these changes will help reduce the extent to which monetary policy needs to constrain total demand growth to bring inflation back to the central bank's target," he added.

The Reserve Bank of Australia held its policy rate steady for a second consecutive meeting on Tuesday, but governor Michele Bullock struck a hawkish tone, suggesting that further tightening of monetary policy may still be needed.