Units off the boil, but house inflation in Sydney and parts of Melbourne now "very strong" RBA June minutes

Units off the boil, but house inflation in Sydney and parts of Melbourne now "very strong" RBA June minutes
Jonathan ChancellorDecember 7, 2020

Conditions in the housing market in Sydney and parts of Melbourne had remained "very strong," though trends were more mixed in other cities, according to the Reserve Bank of Australia June meeting minutes.

The ratcheting up of the market strength comes after prior commentary that had these markets as "strong." 

It noted dwelling investment looked to have grown strongly in the March quarter and forward-looking indicators of construction activity pointed to a further pick-up.

Members noted that conditions in the established housing market had continued to vary across the country.

"Although housing price inflation had remained high in Sydney and, to a lesser extent, in Melbourne over recent months, there had been some divergence in price developments for different segments of these markets; price inflation of detached houses had increased, whereas price inflation for units had eased in both cities."

This trend was picked up in the June CoreLogic RP Data statistics

"Noting that housing price growth in other cities and regional areas had declined over recent months, members discussed the strength and composition of underlying supply and demand conditions in different parts of the housing market."

They also observed that there was a relatively low stock of dwellings for sale in Sydney and Melbourne and that dwellings took only a short time to sell.

Members noted that housing credit growth overall had been broadly steady at around 7% (on a six-month-ended annualised basis), though the latest data on loan approvals had showed a pick-up.

Over the past six months or so, growth in investor credit had eased back to be running at an annualised pace of a bit above 10%. However, over more recent months there had been solid increases in housing loan approvals to both owner-occupiers and investors, particularly in New South Wales, following earlier declines.

 

 

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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