The Reserve Bank of Australia has cut interest rates for the second time in a year in bid to head off a strengthening Australian dollar and protect the economy against falling mining investment.

Prices for iron ore, Australia’s number one export, have halved in recent months.

Interest rates are now at a new all-time low of 2%.

Analysts warned past housebuilding booms were likely to be repeated, and flagged the Sydney property market in particular as close to overheating.

Government revenues in resource-rich Australia are particularly hard-hit by falls in commodity prices.