10 things to know about September’s RBA meeting minutes

10 things to know about September’s RBA meeting minutes
10 things to know about September’s RBA meeting minutes

The Reserve Bank of Australia's September meeting minutes are full of crucial information about the current state of the housing market and the potential future for interest rate changes.

Here are 10 things they mentioned that every property investor should know. If you want to read the full meeting minutes they are available online.

  1. We’re most likely going to see stable interest rates.

    “Members considered that the most prudent course was likely to be a period of stability in interest rates.”

  2. The rate of house price growth has the Reserve Bank a little uneasy.

    “Members further observed that additional speculative demand could amplify the property price cycle and increase the potential for property prices to fall later.”

  3. Competition in lending is up, but standards have not been loosened by lenders.

    “[Easier wholesale funding conditions globally] had encouraged stronger competition in lending for housing and to large businesses, but members noted that this had not, to date, led to a general easing in mortgage lending standards and policies.”

  4. Investors, rather than owner occupiers, were noted as the influential factor of the current cycle.

    “For investors in housing, the pick-up in housing credit growth had been more pronounced than for owner-occupiers, with investor demand particularly strong in Sydney and, to a lesser extent, Melbourne.”

  5. Australia’s commercial property market is also performing well and has attracted both local and foreign investment interest with higher rental returns yielded than commonly seen overseas.

    “This had boosted prices even though rents for some types of commercial property had declined. In contrast, demand for finance from other parts of the business sector remained subdued, although business credit growth had picked up a little in recent months.”

  6. China’s residential property market is an increasing concern for the RBA, particularly as it continues to weaken.

    “[These developments] and their potential to spill over to broader activity and the financial system – remained a risk to the outlook for China. They noted that there was scope for further adjustments to policy settings by the authorities if needed, as well as the potential for tension between the objectives of maintaining economic growth at close to its current pace and placing growth in financing on a more sustainable footing.”

  7. Further growth in dwelling investment is expected to be seen, with new dwellings seeing an uptick.

    “Members noted that dwelling investment had expanded further in the June quarter and that leading indicators pointed to continued growth in the months ahead. For new dwellings, loan approvals and first home owner grants had increased strongly over the year and dwelling approvals remained at a high level despite having declined a little since late last year.”

  8. The established market is also showing signs of strengthening across a number of indicators.

    “In particular, housing prices had been rising at a rapid pace and auction clearance rates were above average levels. Housing credit had continued to grow at an annualised pace of around 7%, with investor credit a particularly strong component.”

  9. The average rate on all outstanding housing loans has fallen significantly since the cash rate was dropped over a year ago.

    “Members noted that Australian banks continued to raise funds relatively cheaply, with a recent issue of residential mortgage-backed securities being of record size in the domestic market and occurring at the tightest pricing since the financial crisis. Reflecting lower funding costs and competitive pressures, rates on Australian intermediaries' housing loans continued to edge down in August. The average interest rate on all outstanding housing loans had fallen by around 15 basis points since the cash rate was reduced in August 2013.”

  10. Commodity prices declined slightly over the past month, with the price of iron ore falling to recent lows and coal prices remaining little changed following earlier sharp declines. Mining investment is still expected to drop.

    “Members noted that survey measures of business conditions and confidence continued to improve across non-mining industries and were now above their average levels. While mining investment was estimated to have been little changed in the June quarter, it was expected to decline significantly over the next year or so, consistent with what had been indicated for some time by liaison contacts.”

Jennifer Duke

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

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