The Reserve Bank (RBA) released the minutes of their October board meeting earlier this week.
At the meeting the RBA Board decided to keep official interest rates on hold at 2%.
In making their decision, the minutes noted:
‘The Board judged that it was appropriate to leave the cash rate unchanged at this meeting.
Information about economic and financial developments, both domestically and abroad, would continue to inform the Board’s assessment of the outlook and whether the current stance of policy remained appropriate to foster sustainable growth and inflation consistent with the target.’
The comments about the residential housing market also make for some interesting reading.
‘Dwelling investment had increased strongly over the year to June, despite recording a decline in the June quarter.
Building approvals had declined a little from their recent peak, but remained at levels that implied further growth in dwelling investment, albeit at a gradually declining rate.
Loan approvals for construction of new dwellings had also fallen over the past year.
Growth in housing prices in Sydney appeared to have eased slightly in recent months and auction clearance rates in Sydney and Melbourne had declined a little from their recent peaks.
However, it was too early to be confident that these signs of slowing in housing price inflation would be sustained.
In relation to lending for housing, members noted that the data on the split of lending to owner-occupiers and investors were of questionable quality at present.
The available data suggested that there had been a modest decline in the growth of credit extended to investors in housing of late, which was consistent with the tightening in banks’ lending standards in response to actions of the Australian Prudential Regulation Authority (APRA).
With housing credit growth overall remaining steady over the past year, there had reportedly been a slight pick-up in the growth of housing credit to owner-occupiers.’
The RBA also released its bi-annual Financial Stability Review late last week which provided further analysis of the housing market.
The report notes that when APRA undertook analysis earlier this year it found that lending standards were found to be somewhat weaker than expected.
Although these issues are now being rectified the document noted that in some cases, practices have not met prudential expectations, potentially placing lenders at risk of breaching their responsible lending obligations under consumer protection laws.
The document was also surprisingly pointed about the fact that the RBA is concerned about an oversupply of apartments in inner city areas of Melbourne and Brisbane however, the document did note that the market is a long way from oversupplied at a national level.
Over the week ending October 18, CoreLogic RP Data captured 2,581 auction results, accounting for more than 90% of all auctions held across the capital cities.
The final auction clearance rate over the past week was recorded at 67.4%, down from 69.5% over the preceding week and lower than the 68.6% clearance rate a year ago.
Melbourne’s clearance rate was 72.7% across 1,292 results, down from 73.4% across 1,300 results the previous week.
Sydney’s clearance rate was down for the third consecutive week, from 69.6% the previous week to 63.7% last week, the lowest figure since March 2013.
There were 1,105 auctions held across Sydney last week, with 984 results captured.
Melbourne has now had a higher rate of auction clearance than Sydney for six consecutive weeks.
The national number of newly advertised properties is -3.2% lower relative to the same period one year ago with 47,352 properties added to the listings pool over the past twenty eight days.
Across the combined capital cities new listings are -3.1% lower than they were at the same time last year.
Although new listings are lower than they were a year ago, they continue to trend higher as the Spring Selling Season progresses.
While new listings are lower than a year ago, Sydney in particular continues to see a large increase in new listings relative to a year ago, up 4.4% while Melbourne is the only other city to have recorded an increase, up 5.4%.
The weaker housing markets of Perth (-19.5%), and Darwin (-12.3%) have seen a sharpest declines in new listings relative to a year ago.
Total stock levels nationally are slightly lower than levels a year ago, -1.6% lower nationally and -0.7% lower across the combined capital cities.
Total stock levels in Sydney, Perth, Darwin and Canberra are the only cities in which total listings are now higher than they were a year ago.
In Sydney, total listings are at their highest level since early December last year and rising.