The Reserve Bank of Australia is finding it increasingly difficult to form a clear idea of how the property market is performing with mixed messages adding to the complexity.
In the minutes of its November 1 monetary policy meeting, RBA members including governor Philip Lowe and deputy Guy Debelle noted that assessing conditions in the housing market had “become more complicated”.
“While overall conditions had eased relative to 2015, some indicators had strengthened over the previous few months. In particular, housing price growth had picked up noticeably in Sydney and Melbourne,” according to the minutes.
“However, housing turnover and growth in housing credit both remained lower than a year earlier, consistent with the supervisory measures that had been taken to tighten lending standards and the more cautious attitude to lending in certain segments.
“In addition, a considerable supply of apartments is scheduled to come on stream over the next few years, particularly in the eastern capital cities, and growth in rents in the September quarter was the slowest for some decades.”
The RBA noted that the latest economic forecasts for Australia were “little changed” from those three months earlier.
Members noted that the value of building approvals had reached record levels as a share of GDP and the amount of work in the pipeline had edged higher, suggesting that dwelling investment would support growth for some time yet.
“Conditions in established housing markets had continued to diverge across the country,” they said.
“Housing price growth in Sydney and Melbourne had increased noticeably since earlier in the year.”
The central bank noted that high and rising population growth in Victoria, which reflected population inflows from both overseas and other parts of Australia, had supported conditions in Melbourne's housing market.
In contrast, housing market conditions had been particularly weak in Perth, where population growth had declined from earlier high rates, rental vacancy rates had risen and rents had fallen.
“Nationally, housing credit growth had remained lower than a year earlier at around 6 per cent per annum, although loan approvals to investors had picked up over recent months.”
[Related: Improved outlook to keep RBA 'on sidelines']