The Reserve Bank (RBA) released the minutes of their April board meeting earlier this week.
At the meeting the RBA decided to keep official interest rates on hold at 2.25%.
There was quite a bit of commentary around the housing market:
‘Overall conditions in the housing market had remained strong, supported by very low interest rates and relatively strong population growth.
Housing prices had continued to rise strongly in Sydney and, to a lesser extent, Melbourne, but growth in prices had eased recently in some other parts of the country.
Other indicators of activity had also suggested strong conditions in the established housing market in Sydney and Melbourne.
Housing credit overall had been growing at about 7 per cent in six-month-ended annualised terms, while credit to investors had grown at a pace a little above 10 per cent on the same basis.
Recent data on loan approvals suggested that growth in housing credit was likely to continue at this pace, but not accelerate, in the months immediately ahead.
Meanwhile, new dwelling approvals and loan approvals for new construction were at high levels, pointing to strong growth in dwelling investment over coming quarters.’
The RBA added in their considerations for monetary policy:
‘Members remained alert to the possibility that the low levels of interest rates could foster imbalances in the housing market.
The most recent data suggested that activity in the housing market had remained strong, but there had been little change to housing market conditions overall or in the growth of housing credit in early 2015.
Although prices continued to rise rapidly in Sydney and, to a lesser extent, Melbourne, trends elsewhere were more varied.
Members noted that the Bank was working with other regulators to assess and contain risks arising from the housing market.’
The Australian Bureau of Statistics (ABS) released the March 2015 quarter consumer price index (CPI) data earlier this week
The data which measures inflation showed that headline CPI increased by 0.2% over the quarter and was 1.3% higher over the year.
The RBA has preferred measures of underlying inflation, the trimmed mean and weighted median, over the quarter they both increased by 0.6% while over the year they were 2.3% and 2.4% higher respectively.
Although headline inflation is below the RBA’s target range for annual inflation of 2% to 3%, underlying inflation is sitting within the target band.
The low rate of inflation and the RBA’s dovish position on monetary policy leaves the door well and truly open for further cuts to the official cash rate.
At the time of writing, financial markets were indicating a 55% chance that the RBA would cut the cash rate by 25 basis points at their next meeting in May.
CoreLogic RP Data was tracking 2,603 auctions over the past week, which was a significant increase on the 1,674 auctions the previous week.
The weighted average clearance rate across the capital cities was 78.9%; the sixth consecutive week where the combined capitals clearance rate has been above 75%.
The largest auction market, Melbourne, saw just 1,266 auctions held last week with a clearance rate of 79.5%, up from 77.6% across far fewer auctions over the previous week.
In Sydney there were 988 auctions with a clearance rate of 87.0% which was higher than the 83.4% the previous week and the highest auction clearance rate on our records.
Sydney auction clearance rates have now been above 80% for 11 successive weeks since the Reserve Bank cut official interest rates by 25 basis points at the start of February 2014.
The number of homes being advertised for sale has increased over the past week, the first weekly increase in four weeks
The number of newly advertised properties available for sale has also increased over the week following six consecutive weekly falls.
Total listings nationally are -0.8% lower than the number from a year ago while capital city listings are -3.1% lower.
Over the past four weeks there have been 41,973 newly advertised properties added to the market which is -5.1% fewer than at the same time one year ago.
A similar trend can be seen across the capital cities where 25,172 new listings hit the market over the past four weeks which is -3.7% lower than at the same time last year.
The number of new listings is lower currently compared to the same time in 2014 across most capital cities.
Meanwhile, Brisbane (+1.7%), Perth (+18.4%), Darwin (+28.8%) and Canberra (+18.1%) have more total stock for sale now than they did a year ago.
Note that the total number of properties listed for sale in Sydney (17,928) is now lower than each of: Melbourne (29,555), Brisbane (19,129) and Perth (20,406).
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