The Reserve Bank (RBA) held their June 2016 board meeting earlier this week and at the meeting they decided to keep official interest rates on hold at 1.75%.
In the statement following the announcement, the RBA noted:
• The global economy is continuing to grow at a below average pace;
• Commodity prices have increased a little but remain well below peaks. Subsequently Australia’s terms of trade remain well below levels over recent years;
• Volatility in financial markets has calmed over recent months, funding costs remain low and monetary policy is ‘remarkably accommodative’;
• Economic growth in Australia is continuing while labour market indicators remain mixed, they are consistent with further increases in employment;
• Inflation is low along with growth in labour costs and the RBA expects this to be the case for some time;
• Low interest rates are assisting local demand and the lower dollar is helping local exporters; and
• Recent policy changes by APRA regarding mortgage lending have improved standards however, home values are rising again and a considerable number of units are set to settle over the coming years.
Housing finance data for April 2016 was released earlier this week by the Australian Bureau of Statistics (ABS).
The data highlighted that in April 2016, there was $32.0 billion worth of commitments which was the lowest monthly value of commitments since May 2015.
Looking at the major components of these commitments: there was: $13.4 billion in new commitments (excluding refinances) to owner occupiers, $7.3 billion in owner occupier refinance commitments and $11.3 billion worth of commitments to investors.
The value of owner occupier new loan commitments was at its lowest level in 9 months, owner occupier refinance commitments were at their highest value in 4 months while the value of investor housing finance commitments was the lowest since June 2014.
Although finance commitments fell in April, we are anticipating a rebound in commitments in May.
Over the week ending June 5 there were 2,008 capital city auctions with CoreLogic collecting results for 1,806 auctions, accounting for almost 90% of all auctions held.
The final clearance rate was recorded at 68.2% up from 67.7% over the previous week.
The number of auctions fell from 2,480 over the previous week.
Last week, across Melbourne, 970 auctions were held with a clearance rate of 71.1%.
Melbourne’s clearance rate eased slightly from 71.5% across a higher 1,170 auctions over the previous week.
Sydney’s auction clearance rate was recorded at 72.9% across 692 auctions with the clearance rate down from 73.2% across 811 auctions over the previous week.
Across all other regions except for Canberra and Perth auction clearance rates were higher over the past week.
Melbourne clearance rates have been at or above 70% for 9 consecutive weeks and in Sydney they have been above that mark for 7 weeks, indicating continuing strong buyer demand in each city.
Note that sales listings are based on a rolling 28 day count of unique properties that have been advertised for sale.
Relative to the same period last year, the number of new listings over the past twenty eight days is 7.8% higher on a national basis and the total volume of stock on the market is 2.1% higher.
Across the combined capital cities, new listings are 4.9% higher relative to last year, while total listings are 10.4% higher.
On a city-by-city basis, Brisbane (+15.2%), Adelaide (+14.9%), Perth (+11.1%) and Canberra (+11.4%) are seeing a higher number of new listings than a year ago.
In terms of the total stock available for sale, Melbourne (-1.1%), Hobart (-28.4%) and Canberra (-4.4%) are the only capital cities to have fewer total properties for sale than a year ago.
Nationally, both new and total listings are at their highest level in 10 weeks.
Across the combined capital cities, new listings are at their highest level in 4 weeks and total listings are at their highest level in 10 weeks.