The Reserve Bank (RBA) released the minutes of their May board meeting earlier this week.
At the meeting the RBA kept official interest rates on hold at 2.5% which was the ninth consecutive month on hold.
Within the minutes they also flagged that rates were likely to be on hold for a while longer. Specifically relating to the housing market the minutes noted:
‘The housing market continued to be an area of strength in the economy. Although the most recent data had indicated a decline, dwelling approvals remained at high levels and the flow-on to commencements pointed to strong growth in dwelling investment in the first half of 2014.
Across Australia, housing price inflation had eased somewhat in recent months from the earlier rapid pace, with auction clearance rates edging back and housing loan approvals stabilising.
Other indicators, such as turnover, first home owner grants and loan approvals for new housing, remained consistent with strong demand for both established and new housing.’
Relating to their decision to keep official interest rates on hold the minutes noted: ‘At recent meetings, the Board had judged that it was prudent to leave the cash rate unchanged.
The expansionary setting of monetary policy continued to have the expected effects on economic activity. Notably, a sustained increase in dwelling investment was in prospect, consumption had strengthened a little and business conditions were around average levels.
Recent developments had indicated that the economy had evolved broadly in line with earlier expectations, resulting in little change in the updated forecasts for activity and inflation.
With growth in activity expected to pick up only gradually, and spare capacity in the labour market consequently remaining for some time, growth in domestic costs was forecast to remain contained, which would help to offset the ongoing effect on prices from the depreciation of the exchange rate over the past year.
Given this outlook for the economy and the significant degree of monetary stimulus already in place to support economic activity, the Board considered that the current accommodative stance of policy was likely to be appropriate for some time yet.’
Westpac and the Melbourne Institute released their monthly consumer sentiment index earlier this week. Following the Federal Budget announcement last week there has been a sharp fall in consumer sentiment, down 6.8% to 92.9 points.
The reading is the lowest since August 2011 and was the largest fall in sentiment over the month of a Federal Budget since 1995 when sentiment fell by -7.0%.
Weekly Clearance Rates
[sam id=43 codes=’true’]Auction activity increased last week with 2,194 auctions across the combined capital cities, up from 1,535 the previous week. The weighted average capital city auction clearance rate was recorded at 66.6% last week which was up from 65.0% the previous week.
Melbourne is the country’s largest auction market and the clearance rate was recorded at 68.8% which was up from 61.9% the previous week. Melbourne auction volumes were higher last week (1,068) than over the previous week (710).
Across Sydney, 796 auctions were held and the clearance rate was recorded at 69.6% compared to 618 auctions and a 73.3% clearance rate over the previous week. Auction volumes are set to be higher over the current week, with 2,589 capital city auctions currently scheduled.
Weekly Advertised Listings
Over the four weeks to 18 May, there were 44,675 newly advertised properties listed for sale nationally. The number of newly advertised property listings increased by 3.5% over the week and they are currently 16.0% higher than at the same time last year.
Across the combined capital cities, new listings were 5.8% higher over the week and 19.2% higher than a year ago.
There are currently 247,544 properties listed for sale across the country. Total listings at a national level were 1.2% higher over the week and are -0.4% lower than they were at the same time last year.
Across the combined capital cities, total listings have increased by 2.0% over the week however, they are -5.0% lower than they were at this time a year ago. Capital city listings account for just 42% of all listings nationally.