Housing unexpectedly shows renewed strength: ANZ Research
A release from ANZ Research stating experts are now less sure of lower interest rates exacerbating housing market risks, and states the RBA needs to temper its assessment given renewed strength in approvals, clearance rates and prices.
According to Felicity Emmett, head of Australian economics, ANZ Research, in the longer term, we think the RBA will remain concerned about the feedback from weak rents to inflation, especially given the unprecedented supply of apartments that comes online over the next two years.
"We think that the RBA will remain concerned about the feedback from weak rents to inflation, especially given the unprecedented supply of apartments that come on line over the next two years," she said.
"We think a marked impact on rents is likely given most apartments are rented and with rents being the second-largest component of the CPI basket (there may also be an indirect effect on project home prices, which are the largest item in the CPI).
"Accordingly, we think that the latest strength in the housing market is unlikely to change the RBA’s strong easing bias.
"We are surprised by the strength of approvals and new orders given that surveyed lending standards for property developers have been significantly tightened over the past two years, partly at the behest of regulators, but also because lenders are being more cautious at this stage of the cycle.
"For example, the latest ANZ-Property Council survey reports that lending standards in Q3 were the tightest since early 2012, back when the cash rate was 4.25."