Earlier this week the Reserve Bank’s board (RBA) held their monthly meeting. At the meeting they decided to keep official interest rates on hold at 1.75%.
The key points noted in the Governor’s statement following the meeting were:
• Globally, economies are growing but at a below average pace. While economic growth is picking up in some advanced economies it is slowing in emerging economies such as China.
• There has been recent volatility in the financial markets due to the Brexit vote. Despite the volatility, funding costs for high quality borrowers remain low and globally monetary policy remains very accommodative.
• Recent data indicates economic growth is continuing domestically despite the big fall in business investment with domestic demand and exports rising at an above average rate.
• Domestic inflation remains low and is expected to remain this way for some time. • Interest rates remain low and have supported domestic demand. Lenders are in a position to lend but credit growth remains low.
• Recent supervisory measures have strengthened lending standards for the housing market while many lenders are taking a more cautious approach to lending to certain segments. Home values are rising in many parts of the country however, the considerable supply of apartments coming online over the coming years should slow the market.
• Based on these factors the board decided to keep official interest rates on hold.
Next month’s meeting should be interesting with many economists expecting a further interest rate cut following the release of the June quarter consumer price index (CPI) data in late July.
A low reading for June should result in a similar reaction from the RBA as the low reading for March (i.e. a cut to official interest rates).
Over the week ending July 3 there were 841 capital city auctions with CoreLogic collecting results for 739 auctions, accounting for almost 88%% of all auctions held.
The final clearance rate was recorded at 67.0% up from 66.4% over the previous week however, the number of auctions was much lower due to the Federal election.
Last week, across Melbourne, 270 auctions were held with a clearance rate of 66.7%.
Melbourne auction volumes fell from 1,029 the previous week while the previous week’s clearance rate was higher at 67.3%.
Sydney’s auction clearance rate was recorded at 78.4% across 365 auctions with the clearance rate up from 73.5% across 816 auctions over the previous week.
Sydney’s auction clearance rate has been above 70% for 11 consecutive weeks while Melbourne clearance has been below 70% for four consecutive weeks.
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 -13.9% lower on a national basis and the total volume of stock on the market is 0.1% higher.
Across the combined capital cities, new listings are -15.1% lower relative to last year, while total listings are 6.6% higher.
On a city-by-city basis, Canberra (+0.7%) is the only capital city where new listings are now higher than they were a year ago.
In terms of the total stock available for sale, Hobart (-33.6%) and Canberra (-13.1%) are the only capital cities to have fewer total properties for sale than a year ago.
New listings are at their lowest level in 23 weeks both nationally and across the combined capital cities.
Total listings are at their lowest level in 24 weeks nationally and at their lowest level in 21 weeks across the combined capital cities.
Over the coming weeks we would expect fewer new listings as we head further into the seasonally quieter winter months.