RBA expects further “moderate” growth in new dwelling construction: March minutes

The Reserve Bank expects the housing construction sector to pick up further over 2013 alongside an improvement in buyer interest in some states, minutes of the March monetary policy meeting released today reveal.

At the March 5 meeting, the RBA decided to leave the cash rate unchanged at 3% as "global economic conditions continued to be more positive" and signs that "dwelling investment was growing and it was likely to continue to do so at a moderate pace in the period ahead".

The minutes record that members "observed that dwelling construction activity had picked up further in the December quarter".

“Forward-looking indicators such as building approvals pointed to further growth in construction in the months ahead.

“The increase in approvals had been geographically widespread and the Bank's liaison with builders also suggested there had been an improvement in buyer interest in some states.

“Overall, recent housing market developments pointed to a further moderate increase in dwelling construction in the period ahead," says the minutes.

The minutes also note continued high household savings rates and "borrowing restraint" while "households' net wealth had risen recently with the recovery in asset markets"

"Debt-servicing capacity had also been boosted by lower interest rates, which had helped to keep housing loan arrears and other aggregate measures of financial stress low, despite the unemployment rate recording a modest rise over the past year," say the minutes.

In attendance at the monetary policy meeting were RBA board members Glenn Stevens (chairman and governor), Philip Lowe (deputy governor), Martin Parkinson PSM (secretary to the Treasury), John Akehurst, Jillian Broadbent AO, Roger Corbett AO, John Edwards, Heather Ridout and Catherine Tanna.

Others present were Guy Debelle (assistant governor, financial markets), Malcolm Edey (assistant governor, financial system), Christopher Kent (assistant governor, economic), Jonathan Kearns (head, economic analysis department), Anthony Dickman (secretary) and Peter Stebbing (deputy secretary).

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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