Developers are facing difficulties in obtaining OTP-sales: RBA

The RBA says dwelling investment is likely to be around its peak for this cycle, and is projected to now decline over coming years.

"The pipeline of work to be done on higher-density housing remains very large, which should continue to support activity in the near term."

"This is consistent with reports from construction firms and developers in the bank’s liaison program."

However the RBA noted higher-density building approvals have been trending lower for around a year, and are expected to decline further over coming quarters.

"This implies a much lower level of activity once the current pipeline of work is completed."

"Information from the liaison program also points to a significant fall in pre-sales for new apartments over the past year."

"In addition to the difficulty of obtaining pre-sales, liaison with developers suggests that financial conditions have tightened further over the past six to twelve months."

"As a result, some developers are obtaining financing from alternative sources, though at a higher interest cost."

The bank's statement of monetary policy indicated sales of new detached dwellings have also slowed.

Detached housing investment is forecast to decline in the near term, broadly consistent with the decline in building approvals over the past year.

The RBA also discussed the tightening in lending standards over the past year not being the cause of the recent decline in housing credit growth.

The monetary policy statement also looked at how the uncertainty on house prices is set to impact on demand for appliances and furnishings.