The residential housing market will remain a “key area of focus” for the Reserve Bank when setting monetary policy in future, as assessing conditions in the housing market have “become more complicated”, new research has suggested.
A recent CoreLogic Property Pulse report noted that the RBA’s November monetary policy meeting, at which the bank decided to keep rates on hold at 1.5 per cent, revealed that conditions in housing markets had continued to diverge across the country, as value growth had accelerated while credit growth and turnover had simultaneously slowed.
CoreLogic’s report found this was consistent with “supervisory measures to tighten lending standards” as well as a more “cautious attitude” toward lending in certain segments.
The RBA’s meeting minutes revealed, however, that despite housing credit growth remaining lower than last year at 6 per cent per annum, loan approvals to investors had picked up over recent months.
CoreLogic concluded: “The points which haven’t really been made, but are important, are that the amount of stock, particularly new stock, for sale is lower than last year. You can’t purchase what isn’t for sale. Secondly, turnover is lower, however, with a record pipeline of unit construction, the decline in turnover is not as great as it would seem at first glance, because off-the-plan sales are not counted until settlement (however, they are counted at their original contract date). The residential housing market is set to remain a key area of focus for the RBA when setting monetary policy over the coming months and years.”
Housing demand increases in Sydney and Melbourne
The researchers also confirmed that the property market is becoming increasingly complicated in Australia.
Sydney and Melbourne have shown strong housing demand which has led to many homes selling in excess of their initial list price,” said Cameron Kusher, CoreLogic researcher.
“While these conditions persist, it is difficult to see how home values in Sydney and Melbourne in particular, won’t continue to increase.”
Meanwhile, Perth and Darwin have reported increased discounting levels in the wake of a weakened housing market, and have seen a large rise in the “average days on market” as selling conditions have “become tougher and values have declined”.
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