The Reserve Bank (RBA) held their June 2013 board meeting earlier this week. At the meeting, the board decided to keep official interest rates on hold at 2.75%.
The statement following the board meeting was quite short and had no comments specifically relating to the housing market, however the Board did note (as they have at previous meetings) that there remains scope to cut official interest rates further if they see a requirement to do so.
Financial markets are continuing to price in a further 25 basis point later this year and most economists are also seeing one more rate cut, potentially prior to the federal election.
The Australian Bureau of Statistics (ABS) released the National Accounts for the March 2013 quarter earlier this week. The data contained within the release showed that gross domestic product (GDP) increased by 0.6% over the quarter and has risen by 2.6% over the past year, which is a below trend level of growth.
[sam id=31 codes=’true’]Disposable incomes have increased by just 1.1% over the year which is well below the current rate of inflation (2.5%).
Households continue to save a high proportion of the income with the ratio recorded at 10.6% over the quarter. Over the past five years, the household savings ratio has averaged 9.8% compared to just 1.8% over the previous five years.
This reflects a clear shift in consumer spending patterns and debt aversion since the on-set of the financial crisis which is clearly impacting on demand for housing.
The ABS also released retail trade data for April 2013 earlier this week. The data showed that retail trade increased by 0.2% over the month following a -0.4% fall in March. Over the first four months of the year, retail trade has increased by 2.3% and over the past 12 months, retail trade has increased by 3.1%.
The data suggests that despite higher levels of savings by households, spending is still occurring with a strong focus on food (5.7% yoy) and cafes, restaurants and take-away food services (3.8% yoy).
Latest National Auction Clearance Rates
Last week there were 1,845 capital city auctions, up from 1,687 the previous week and the highest number of auctions since late May of this year. The combined capital city auction clearance rate was recorded at 72.2%, up from 67.1% over the previous week and the highest auction clearance rate since the week ended 18 April 2010 (75.1%). rpdata collected results for 85% of all capital city auctions which took place last week.
Auction clearance rates have now been above 60% for nine consecutive weeks. In Melbourne, Australia’s largest auction market, the clearance rate was recorded at 79.7% last week, up from 69.2% the previous week, the highest auction clearance rates for the city since the week ended 18/4/10 (84.3%).
Across Melbourne, the number of auctions which took place last week rose to 867 from 823 the previous week.
In Sydney, the auction clearance rate increased to 75.2% last week from 71.1% over the previous week, the highest clearance rate for the city since 21/3/10 (76.5%). Auction volumes across the city increased from 598 over the previous week to 639 last week.
Auction activity is set to ease this week, with our figures indicating that there will be 1,031 capital city auctions this week.
Advertised Stock on the Market
The number of new listings being added to the market fell by 0.8% over last week. 43,125 new listings were added to the market nationally over the past 4 weeks, with 25,991 of these located in a capital city.
With the number of new listings falling over the week, there was also a slight fall in the number of total listings. There were 285,047 homes advertised for sale over the past four weeks. Across the combined capital cities, there were 127,871 homes available for sale, 45% of the total stock available for sale.
New listings nationally are now -4.7% lower than they were a year ago and total listings are -1.8% lower than they were at the same time last year.