The Reserve Bank (RBA) released the minutes of their December board meeting earlier this week.
At the meeting the RBA decided to keep official interest rates on hold at 2.0% and with no meeting in January they will remain at this level until at least February.
Relating to the housing market the RBA minutes noted:
‘The available data suggested that dwelling investment had increased in the September quarter.
Building approvals remained at high levels, despite having eased somewhat since the start of the year.
This was consistent with the expectation of further increases in dwelling investment in coming quarters, albeit at a gradually declining rate.
In the established housing market, auction clearance rates and housing price growth had declined over recent months in Sydney and to a lesser extent in Melbourne.
Prices were declining in Perth and rising moderately in much of the rest of the country.
Members observed that the growth of total housing credit had been little changed.
The easing in housing price growth in Sydney and Melbourne and apparently lower growth in lending for the purpose of investor housing had followed an earlier tightening in lending terms, partly in response to supervisory measures announced by the Australian Prudential Regulation Authority.
It was still too early to assess the effect of the modest increase in lenders’ mortgage rates in November (for both investors and owner-occupiers) on the housing market.’
In a more recent interview with the Australian Financial Review the RBA Governor Glenn Stevens acknowledged that tougher lending rules imposed by APRA seemed to be working to cool the Sydney and Melbourne housing markets.
He noted that, “things have calmed down a bit, I think that’s welcome.
Based on the comments from the RBA, the prospect of a rate hike will be well in the future although they have kept open the possibility for a rate cut if it is deemed necessary.
The low cash rate setting looks set to at the very least hold steady, at this point the cash rate futures market indicates no changes for official interest rates over the next 18 months.
The Australian Bureau of Statistics (ABS) released its Residential Property Price Indexes for September 2015 (powered by CoreLogic RP Data’s data).
The data showed that the value of dwelling stock nationally was $5.86 trillion, lower than our estimate of $6.3 trillion.
The data also provided an estimate of 9,572,400 residential dwellings at the end of September 2015.
The number of dwellings has increased by 1.7% over the past 12 months or an increase of 163,200.
Over the week ending December 13 2015, CoreLogic RP Data captured 2,989 auction results, accounting for more than 91% of all auctions held across the capital cities.
The final auction clearance rate over the past week was recorded at 58.2% which was a slight increase on the 57.3% the previous week.
Melbourne’s clearance rate was 64.9% across 1,442 results which represented a slight increase on the 63.3% across 1,522 results over the previous week.
Sydney’s clearance rate was recorded at 54.7% last week across 808 results, increasing from 52.9% across 944 auction results the previous week.
It was the first increase in clearance rates for Sydney in 11 weeks.
Despite the increase Sydney auction clearance rates have been below 60% for 6 consecutive weeks with a run of clearance rates at those levels for Sydney last recorded in late 2012.
The national number of newly advertised properties was -8.3% lower relative to the same period one year ago with 39,313 properties added to the listings pool over the past twenty eight days.
Across the combined capital cities new listings are -8.2% lower than they were at the same time last year suggesting the Christmas/New Year slowdown in new listings has hit earlier this year than last year.
Melbourne (+0.5%), Adelaide (+1.1%) and Canberra (+15.3%) are the only capital cities where new listings are higher than a year ago.
The total number of properties available for sale is also lower than a year ago across both the national (-2.7%) and combined capital city (-1.1%) markets.
The capital cities with a higher number of total listings relative to a year ago are: Sydney (+4.7%), Perth (+8.5%) and Darwin (+11.6%).
Over the coming weeks as we lead in to Christmas we would expect the number of new listings to continue to trend lower and the total listings to continue to fall as vendors withdraw their properties from the market over the typically quiet sales period.
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