The Reserve Bank Board met at the beginning of the week to deliberate monetary policy.
At the meeting the RBA decided to keep the cash rate on hold at the historically low level of 2.25%.
In the statement following the RBA’s decision, they are clearly leaving the door open for further rate cuts over the coming months.
The final paragraph of the RBA statement read:
“At today’s meeting the Board judged that, having eased monetary policy at the previous meeting, it was appropriate to hold interest rates steady for the time being. Further easing of policy may be appropriate over the period ahead.”
National accounts data was released this week which reveals Australia’s economy continued to expand over the final quarter of 2014, albeit at a pace that was slower than the historical trend.
The Australian economy grew by 0.5% over the December quarter after expanding 0.4% over the September quarter.
Australia has seen 23 consecutive years of economic expansion, however, with the annual rate of economic growth slipping to 2.5% over the 2014 calendar year, the rate of growth is slower than the decade average of 2.8%.
Based on the latest national accounts data, the Australian economy was valued at $1.6 billion over the 2014 calendar year.
The household savings ratio eased from 9.3% to 9.0% over the quarter, indicating that consumers are becoming more willing to spend rather than save.
This trend is also highlighted by household spending figures which were up 2.9% over the year, the fastest rate of household spending growth in three years.
In another positive sign, home building activity was up 5.3% over the December quarter after falling by 0.1% over the September quarter.
The lack of momentum across the Australian economy is the primary reason why the Reserve Bank has moved the cash rate to historic lows.
With inflation also remaining low, together with the soft economic growth reading, the prospect for another rate cut over the coming months is quite high.
CoreLogic RP Data was tracking 3,238 auctions over the past week, the largest number of weekly auctions since the week ending December 14 last year.
The weighted average clearance rate across the capital cities was 76.4%; the third consecutive week where the combined capitals clearance rate has been 74% or higher.
We haven’t seen three consecutive weeks where auctions clearance rates were this high since September 2009.
The largest auction market, Melbourne, saw 1,565 auctions held last week with a clearance rate of 77.1% (the highest since September last year).
In Sydney there were 1,223 auctions with a clearance rate of 81.4%.
This is the fourth week running where Sydney’s auction clearance rate has been above 80%.
Number of homes for sale
Note that sales listings are based on a rolling 28 day count of unique properties that have been advertised for sale
The number of homes being advertised for sale has continued to move higher, however national listing numbers remain -1.7% lower than a year ago and capital city listings are -2.7% lower than the same time last year.
Over the past four weeks there have been 47,502 newly advertised properties added to the market which is -3.5% fewer than at the same time one year ago.
A similar trend can be seen across the capital cities where 29,552 new listings hit the market over the past four weeks which is -2.4% lower than at the same time last year.
Brisbane (+2.9%), Perth (+2.2%) and Darwin (+4.2%) are the only capital cities where new listings are higher now than they were a year ago.
Meanwhile, only Perth (+10.3%), Canberra (+16.3%) and Darwin (+32.0%) have more total stock for sale now than they did a year ago.