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RBA holds rates on ‘strengthened’ housing market

Following its decision to leave rates on hold yesterday, the Reserve Bank of Australia says conditions in the housing market have strengthened overall.

RBA governor Philip Lowe’s statement on the central bank’s monetary policy decision noted that funding costs for some borrowers have also risen, “but remain low” and monetary policy remains “remarkably accommodative” globally.

“Low interest rates have been supporting domestic demand, and the lower exchange rate since 2013 has been helping the traded sector,” Mr Lowe said.

“Financial institutions are in a position to lend for worthwhile purposes. These factors are assisting the economy to make the necessary adjustments, though an appreciating exchange rate could complicate this.

“Conditions in the housing market have strengthened overall, although they vary considerably around the country.”

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The RBA governor said property prices are “rising briskly” in some markets, while they continue to decline in others.

“Housing credit has picked up a little, although turnover of established dwellings is lower than it was a year ago,” Mr Lowe said.

“Supervisory measures have strengthened lending standards and some lenders are taking a more cautious attitude to lending in certain segments.”

Mr Lowe observed that a considerable supply of apartments is scheduled to come on stream over the next couple of years, particularly in the eastern capital cities. He added that growth in rents is the slowest for decades.

[Related: RBA makes cash rate call]

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