Housing market growth to remain steady

Housing market growth to remain steady

Posted on Friday, August 09 2013 at 2:18 PM

Improvements in the property market will continue but the strength of the recovery is uncertain, according to today’s quarterly statement on monetary policy released by the Reserve Bank of Australia (RBA).

The statement suggests a
continued rise in dwelling investment in the short-term future due to lower
interest rates and with housing prices six per cent above their 2012 trough.

“The demand for housing finance
has continued to strengthen, consistent with rising dwelling prices and lower
interest rates, with the value of housing loan approvals rising at an
annualised pace of 25 per cent over the past six months,” according to the

In addition, households are also
paying down their debt more quickly.

With households maintaining
their higher pace of mortgage prepayments much of the growth in loan approvals is
due to repeat buyers and investors with growth in the level of housing credit
relatively modest, according to the report.

The increase in total building
approvals is also expected to continue, the statement says, aided by “an
ongoing recovery in the established housing market, relatively high rental
yields, low borrowing rates and government support to first home buyers.”

Although the report also
found first home buyer approvals remained subdued due to changes to first home
buyer incentives, which refocused government assistance towards purchases of
newly built homes. 

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