The Reserve Bank (RBA) released the minutes of its September board meeting earlier this week.
At the meeting, the last for Governor Glenn Stevens, the RBA board decided to keep official interest rates on hold at 1.5%.
The minutes included quite a lot of commentary around the housing market which follows.
‘Conditions in established housing markets had generally eased over 2016.
Growth in housing prices had declined at the national level and across most capital cities over the past year, although there remained considerable variation by location.
Housing prices had been declining in year-ended terms in Perth for some time.
In the rental market, inflation had remained around historical lows and had also eased across most capital cities, most notably in Perth, where rents had continued to decline.
The aggregate rental vacancy rate had drifted higher and was close to its long-run average.’
‘Other indicators for the housing market had also generally pointed to weaker conditions than a year earlier.
In the established housing market, the number of auctions had declined and remained lower than a year earlier, even though auction clearance rates had increased of late (particularly in Sydney).
In the private treaty market – where, nationally, over 80 per cent of transactions occur – turnover had also declined since the previous year and the average number of days that a property was on the market had been on an upward trend.
Members noted that sales of new properties were included in the turnover data, but that there might be measurement problems related to the long lag between purchasing and settling new properties bought off the plan, which could lead to revisions.
Finally, in recent months the value of housing loan approvals had been broadly steady and housing credit growth had been lower than a year earlier, consistent with the earlier tightening in lending standards and low turnover.’
While the commentary is accurate, the recent strength in auction clearance rates, ongoing growth in home values, a rebound in dwelling approvals and lack of new stock entering the market for sale will likely pique the RBA’s attention.
There were 2,062 capital city auctions over the week ending September 11 with CoreLogic collecting results for 1,882 of these auctions or just over 91% of all auctions.
The final clearance rate was recorded at 75.4%, down from 77.1% across 1,899 auctions the previous week.
Last week in Melbourne, there were 974 auctions compared to 830 auctions the previous week.
Last week’s auction clearance rate was recorded at 78.3% which was marginally lower than the 79.3% the previous week.
In Sydney, the auction clearance rate was recorded at 80.6% last week which was virtually on par with the 80.7% recorded over the previous week.
Sydney recorded a similar number of auctions last week (758) compared to the previous week (747).
Auction clearance rates were also lower over the week in most of the other capital cities.
In Melbourne, auction clearance rates have now been above 75% for 5 consecutive weeks and they have been above that level in Sydney for 7 weeks.
Note that sales listings are based on a rolling 28 day count of unique properties that have been advertised for sale.
Over the past 28 days, there were 43,999 newly advertised properties for sale nationally which was -1.7% lower than a year ago and 230,683 total listings which was -1.5% lower than a year ago.
Newly advertised listings were also lower over the year across the combined capital cities (-3.6%) however, total listings were noticeably higher (+4.1%).
The only capital cities in which new listings were higher over the year were: Brisbane (+2.0%), Perth (+16.3%) and Canberra (+14.4%).
In terms of total stock available for sale, the only capital cities in which there were fewer listings than a year ago were: Sydney (-2.4%), Hobart (-26.6%) and Canberra (-5.1%).
Nationally, the number of newly advertised properties for sale is at its highest level in 15 weeks and total listings are at their highest level in 9 weeks.
A lack of new stock available for sale in Sydney in particular appears to be creating market urgency and has driven a rebound in home value growth along with surging auction clearance rates.