The Reserve Bank of Australia is being urged by the Organisation for Economic Co-operation and Development to prepare the nation for official interest rate increases in 2017 to avoid a housing market blowout.

Lamenting the Turnbull government's failure to be more bold on tax reform – including by widening and raising the goods and services tax - the Paris-based rich-country think tank says there is a growing need to unwind house prices and other financial distortions caused by ultra-low official interest rates.