Industry Market Wrap
The Reserve Bank released their board minutes this week, revealing their deliberations from their board meeting earlier this month where they decided to keep the cash rate steady at 2.5%; the tenth consecutive month where official interest rates have remained at their low setting.
The RBA have largely looked through the recent release of stronger than expected GDP data (Australia’s economy expanded by 3.5% over the 12 months to March this year), indicating they expect economic growth to be below trend over the next year or so, likely a reference to the ongoing weakness in commodity prices.
The Bank is comfortable with the pace of growth in the housing market, highlighting that market conditions had eased compared with 2013. The minutes also indicated the Bank is seeing an increase in household consumption, with retail spending continuing to grow at the same strong pace as what was recorded over the last quarter of 2013.
Overall the bank’s tone was slightly more dovish than their previous minutes and they have indicated they are satisfied with the current cash rate setting over the foreseeable future. The Australian dollar has moved slightly lower since the release of the Minutes, a positive sign that currency markets aren’t expecting a rate increase any time soon.
The ASX Cash Rate Futures indicator is projecting that the cash rate won’t move higher until November 2015. [sam id=43 codes=’true’]
Other data released this week included population statistics from the Australian Bureau of Statistics. Australia’s population increased by a further 0.4%, or 85,100 new residents over the December 2013 quarter, taking the annual rate of population growth up to 1.7% over the 2013 calendar year.
Net overseas migration accounted for 60% of total annual population growth, while natural increase accounted for 40%. While Western Australia recorded the fastest rate of population growth for 2013, up 2.9 per cent, New South Wales (1.5%) has recorded its fastest annual population growth since mid-2009. Tasmania recorded the slowest rate of population growth (0.3%).
RP Data also released their latest Pain and Gain update for the March quarter this week. The report showed the trend towards fewer loss making sales had levelled over the March quarter of this year, with 9.8% of all residential re-sales recording a gross loss compared with their original purchase price.
The result was up slightly from the December quarter last year (9.7%). In contrast, 90.2% of all re-sales made a gross profit equating to an average profit of just over $225,088 on each sale. More detail from this report was published on the RP Data blog this week, located here.
Weekly Clearance Rates
There were 2,108 auctions held across Australia’s capital cities last week, a large jump from the week prior where only 1,191 auctions were held. RP Data collected results from 89% of all auctions held and the resulting weighted average clearance rate across these results was 65.5%. The largest auction market, Melbourne, saw 1,016 auctions held with a strong clearance rate of 69.2% (the highest rate of clearance in 12 weeks). Sydney’s auction market saw 798 scheduled auctions with a clearance rate of 69.3%, well below the recent high of 84% recorded back in February this year. RP Data is currently tracking 1,787 capital city auctions for the current week.
Weekly Advertised Listings
Over the four weeks to 15 June, there were 39,841 newly advertised properties listed for sale nationally. New listing numbers have been trending lower, which is a seasonal phenomenon, however, new stock being added to the market is 8.3% higher than at the same time last year. Across the combined capital cities, new listings were 12.0% higher than a year ago.
There are currently 246,573 properties listed for sale across the country. Total listings at a national level were 1.1% higher compared with the same time last year. Across the combined capital cities, total listings remain 2.1% lower than a year ago, highlighting that total stock levels have reduced.