Positive outlook for housing market: RBA

Positive outlook for housing market: RBA

Posted on Tuesday, June 18 2013 at 1:20 PM

This month’s meeting of the Reserve Bank of Australia (RBA) board found building approvals for both higher-density and detached dwellings had increased.

There was generally a more positive outlook with regard to
dwelling investment, according to minutes from the RBA meeting.

Following the board’s decision in May to reduce the cash
rate target by 25 basis points, most lenders in Australia had subsequently
lowered their standard variable housing rates in line with the reduction in the
cash rate.

According to the board, this had “resulted in lending
rates for most households and businesses reaching or approaching historic lows”.

There were also signs the appetite for borrowing in the
household sector was picking up, and the housing market generally appeared to
be improving, as the effects of the most recent and earlier reductions in the
cash rate worked their way through the economy, the board heard.

Members observed that the effects of low interest rates
had been evident in a range of housing market indicators.

In addition, loan approvals had grown more strongly in
recent months, including for new housing, and auction clearance rates were well
above average in Sydney and had picked up to be a bit above average in Melbourne.

The meeting was told while measures of dwelling prices had
been relatively flat over recent months, they were still higher than the
previous year.

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