Housing market conditions improving: RBA

The housing market is one of the bright spots in an economy that continues to perform "below trend" the RBA has said in its monthly monetary policy statement.

The economy is now expected to grow by 2.25% this year down 0.5 percentage points on an earlier May forecast. Growth is expected to pick up to 2.5% for the 2013/14 financial year.

The RBA reports a "slightly weaker" global economic outlook than a few months ago "reflecting, among other things, the assessment that growth in China is now unlikely to pick up much, if at all, in coming quarters" and that the Australian economy has performed "below trend over the first half of this year".

In addition, the RBA notes "softer conditions in the labour market", "softer growth in incomes" and "weak growth of consumption over recent months" as the Australian economy transitions away from mining investment to non-mining sectors.

But "in contrast", the RBA said that "conditions in the housing market continue to improve".

"Dwelling prices increased further in recent months and auction clearance rates remain high.

"This has been accompanied by an increase in housing loan approvals in response to low interest rates.

"These factors, along with strong population growth and the relatively low level of dwelling investment for some years now, point to a continued rise in dwelling investment in the period ahead.

"Indeed, residential building approvals, especially for detached housing, increased in the June quarter and it seems likely that this will continue," says the RBA.