The Reserve Bank (RBA) released the minutes of its monthly board meeting early this week. At the meeting the RBA's board decided to keep official interest rates on hold at 2.25% following a 25 basis point cut to rates the previous month. The minutes revealed that in deciding to keep interest rates on hold the board had decided to give the economy time to adjust to the cut in rates the previous month. The minutes did note that while the cash rate was going to be on hold in March, that further easing to the cash rate may be required to support sustainable growth and demand and keeping inflation within it's target range.
The housing market featured quite heavily in the RBA's latest minutes as well. It is fairly clear that the growth in Sydney and to a lesser degree Melbourne is a particular pain point for the RBA at the moment. Some of the commentary is detailed below:
Housing price growth remained strongest in Sydney and to a lesser extent Melbourne, while price rises in other parts of the country had been more modest and prices had even declined in some cities recently. A range of indicators, including residential building approvals, suggested further strong growth of dwelling investment in the near term. Growth in housing credit for owner-occupiers had remained around 6 per cent in six-month-ended annualised terms, while growth in credit for housing investors was noticeably faster, at over 10 per cent measured on the same basis.
In Australia, risks in the household sector continued to be centred on housing and mortgage markets. The composition of these markets remained skewed to investor activity, especially in Sydney. Members noted that, at the margin, the recent decline in interest rates could boost the housing market, including prices. The measures announced by the Australian Prudential Regulation Authority and Australian Securities and Investments Commission in December were designed to temper the housing market risks faced both by households and lenders, although these risks also needed to be placed in the context of the prevailing low levels of household stress.
Capital City Auction Clearance Rates - Week ending March 15, 2015
CoreLogic RP Data was monitoring 2,556 capital city auctions over the past week, indicating that current auction activity is tracking higher than at the same time last year when 2,293 capital city auctions were held. The capital city weighted average clearance rate was 77.2% last week, the second highest clearance rate recorded so far this year and considerably higher than the 70.8% recorded at the same time last year. Over the past five weeks, the clearance rate has consistently been recorded above 70%. Across Melbourne, Australia's largest auction market, the clearance rate was recorded at 78% last week with 1,269 auctions held across the city. In Sydney, 926 auctions were held and the clearance rate was recorded at 83.9%. This is the sixth consecutive week in which Sydney's auction clearance rate has been recorded above the 80% mark.
Number of Homes for Sale
Residential property listings advertised for sale over the four weeks ending 15/03/21015 - 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 -2.0% lower than a year ago and capital city listings are -4.0% lower than the same time last year. Over the past four weeks there have been 46,677 newly advertised properties added to the market which is -9.0% fewer than at the same time one year ago. A similar trend can be seen across the capital cities where 28,837 new listings hit the market over the past four weeks which is -9.8% lower than at the same time last year. The number of new listings actually fell at both a national and capital city level over the past week. Perth (+1.6%) is the only capital cities where new listings are higher now than they were a year ago. Meanwhile, only Perth (+15.4%), Canberra (+23.7%) and Darwin (+33.8%) have more total stock for sale now than they did a year ago.
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