Cameron Kusher on the RBA's Financial Stability Review: Tweet of the day
Tomorrow, the Reserve Bank of Australia will release its half-yearly Financial Stability Review.
In the lead up, RP Data's senior research analyst Cameron Kusher has been taking a look at the March 2014 Financial Stability Review, copying the following extract:
"More generally, an upsurge in speculative housing demand would be more likely to generate financial stability risks if it brought forth an increase in the construction of a scale that led to a future overhang of supply and a subsequent decline in housing prices. At a national level, Australia is a long way from the point of housing oversupply, though localised pockets of overbuilding are still possible.
"While the recent pick up in higher-density dwelling construction approvals in Sydney and Melbourne warrants some monitoring, the near-term risk of oversupply in those cities seems low. Indeed, concerns expressed by lenders about possible oversupply in the Melbourne apartment market over the past year seem to have lessened, despite rental yields there remaining quite low."
The Reserve Bank noted that strong investor activity in the housing market may be a sign of speculative demand, an upswing of which "may be more likely to generate financial stability risks" if it resulted in housing oversupply.
While the Reserve Bank seemed largely unworried about oversupply in the last Financial Stability Review, governor Glenn Stevens has expressed concerns over the current rate of property price growth.