This week’s property market wrap from RPData | Tim Lawless

The Reserve Bank (RBA) released the minutes of their September board meeting earlier this week. At the meeting the board decided to keep official interest rates on hold at 2.5%.

Although the initial statement in which they detailed their decision provided little insight, the minutes provide a much more detailed view about the board’s thinking.

Some of the key take-outs for the property sector are detailed below and note the board were briefed on the RBA’s half yearly Financial Stability Review to be released next week:

  1. Members noted that dwelling investment had expanded further in the June quarter and that leading indicators pointed to continued growth in the months ahead.
    For new dwellings, loan approvals and first home owner grants had increased strongly over the year and dwelling approvals remained at a high level despite having declined a little since late last year.
    At the same time, a wide range of indicators showed that conditions in the established housing market continued to strengthen.shutterstock_91924961
    In particular, housing prices had been rising at a rapid pace and auction clearance rates were above average levels. Housing credit had continued to grow at an annualised pace of around 7 per cent, with investor credit a particularly strong component.
  2. Australian banks and non-banks had both benefited from easier wholesale funding conditions globally.
    This in turn had encouraged stronger competition in lending for housing and to large businesses, but members noted that this had not, to date, led to a general easing in mortgage lending standards and policies.
    For investors in housing, the pick-up in housing credit growth had been more pronounced than for owner-occupiers, with investor demand particularly strong in Sydney and, to a lesser extent, Melbourne.
  3. Members further observed that additional speculative demand could amplify the property price cycle and increase the potential for property prices to fall later.
    The main risks in such a scenario would likely be to the stability of the macroeconomy rather than the financial system, particularly if households were to react to declines in their wealth by cutting back on their spending.
    Members were also updated on some of the recent actions by the Australian Prudential Regulation Authority in this area.

It is rare for the RBA to focus on the housing market in such detail as part of their interest rate deliberations.

The time spent on the housing market at their latest meeting highlights that the Reserve Bank are becoming increasingly wary of the strong housing market conditions in Sydney and Melbourne and particularly the level of speculative investment that is taking place in these markets.

Weekly Clearance Rates

Auction clearance rates moved slightly lower over the week, with the capital city weighted average clearance rate recorded at 72.3%, down from 74.1% the previous week.Free_property_sales_report

There were 2,080 auctions held over the week compared with 2,073 over the same week a year prior. Auction numbers were higher than the 1,897 recorded over the previous week.

RP Data collected 87% of all auction records. The major auction markets of Sydney and Melbourne continued to record healthy auction results.

Sydney’s clearance rate was 78.4% across 634 reported auctions, which was down from 80.1% across 705 auctions the previous week.

Melbourne’s auction market recorded a clearance rate of 73.4% across 922 collected auction results. The clearance rate in Melbourne last week was down from 76.7% across 872 auctions the previous week.

Capital city auction clearance rates

Week ending September 14, 2014

Weekly auction clearance rates

Weekly Advertised Listings

Over the four weeks to 14 September, there were 35,492 newly advertised properties listed for sale nationally (excluding WA). New listing numbers are slowly trending higher as we enter Spring.

[sam id=51 codes=’true’]

Nationally (exc. WA), new listings are -2.8% lower than a year ago, while across the combined capital cities new stock being added to the market is -0.9% lower than at the same time last year.

There are currently 206,544 properties listed for sale across the country (excluding WA). Total listings at a national level were -7.0% lower compared with the same time last year.

Across the combined capital cities, total listings are -12.5% lower than a year ago, highlighting that total stock levels have reduced over the year.

Note that sales listings are based on a rolling monthly count of unique properties that have been advertised for sale.

*We are currently experiencing some issues with the sourcing of our WA listings data. Our data team is looking into this as a matter of priority however, we have moved WA results from this week’s results and will re-issue when they are revised.

Number of homes for sale*

Residential property listings advertised for sale over the four weeks ending 14/09/2014

Advertised listings



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Tim Lawless

About

Tim heads up the Core Logic RP Data research and analytics team, analysing real estate markets, demographics and economic trends across Australia. Visit www.corelogic.com.au


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