RBA housing debt outpacing the slow growth in household incomes: RBA

RBA housing debt outpacing the slow growth in household incomes: RBA
RBA housing debt outpacing the slow growth in household incomes: RBA

The RBA October meeting noted the most recent information about conditions in the established housing market suggested that growth in housing prices had eased from the previously brisk pace in some cities, most notably Sydney, and had remained soft in some others.

Housing debt had been outpacing the slow growth in household incomes for some time, it noted.

"Recently, growth in credit to investors in housing had eased a little, although overall growth in household credit had been little changed," the October minutes suggested.

Members discussed the importance of continuing to assess the various risks in household balance sheets.

Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.

The board noted there had been a pick-up in household consumption growth in the June quarter despite ongoing weakness in household disposable income growth.

Members noted that consumption growth had increased in most states, although it had remained noticeably weaker in Western Australia than in the eastern states, consistent with weaker income growth in that state.

Recent strong growth in employment across all the states was expected to support income growth, and therefore consumption growth, in the period ahead.

Members observed that residential construction appeared to have plateaued, with dwelling investment largely unchanged in the June quarter.

The pipeline of work already approved or under way was expected to continue supporting dwelling investment around current levels over the subsequent year or so; the peak of apartment completions was expected to occur during this period.

At the current level of dwelling investment, growth of the housing stock was expected to outstrip that of the population, as it had done in the preceding few years.

Established housing market conditions had continued to ease in Sydney and Melbourne, but had been broadly unchanged in other cities.

This pattern was evident in revised housing price data released by CoreLogic in September, as well as in auction clearance rates.

Housing prices had continued to decline gradually in Perth. Nationwide measures of housing prices had increased by around 9 per cent over the year to September.

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Mortgages Meeting Minutes

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