The RBA has released its Minutes for the 1 November meeting, which included the below comment on housing noting that conditions are getting “complicated” to read:
The value of building approvals had reached record levels as a share of GDP and the amount of work in the pipeline had edged higher, suggesting that dwelling investment would support growth for some time yet. Conditions in established housing markets had continued to diverge across the country. Housing price growth in Sydney and Melbourne had increased noticeably since earlier in the year. Members noted that high and rising population growth in Victoria, which reflected population inflows from both overseas and other parts of Australia, had supported conditions in Melbourne’s housing market. In contrast, housing market conditions had been particularly weak in Perth, where population growth had declined from earlier high rates, rental vacancy rates had risen and rents had fallen. Nationally, housing credit growth had remained lower than a year earlier at around 6 per cent per annum, although loan approvals to investors had picked up over recent months…
Members noted that assessing conditions in the housing market had become more complicated. While overall conditions had eased relative to 2015, some indicators had strengthened over the previous few months. In particular, housing price growth had picked up noticeably in Sydney and Melbourne. However, housing turnover and growth in housing credit both remained lower than a year earlier, consistent with the supervisory measures that had been taken to tighten lending standards and the more cautious attitude to lending in certain segments. In addition, a considerable supply of apartments is scheduled to come on stream over the next few years, particularly in the eastern capital cities, and growth in rents in the September quarter was the slowest for some decades.
Clearly, the RBA is also confused by the conflicting signals around dwelling prices, finance, turnover, auction clearances, rents and supply.
