subscribe to our newsletter

Investor lull could ‘sow seeds’ of housing ‘upswing’

The Reserve Bank has touted the possibility of an investor-driven resurgence in the residential property market.

In minutes released from the Reserve Bank of Australia’s (RBA) latest monetary policy board meeting, the central bank noted that continued weakness in demand for housing from property investors could be paving the way for an “upswing” in prices, triggered by a supply and demand imbalance in the unit sector.

“Data on residential building approvals and information from the bank’s liaison program suggested that there was likely to be further weakness in dwelling investment in the near term,” the bank noted.

“[Members] recognised that this could sow the seeds of an upswing in the housing price cycle at some point, particularly given the lengthy stages in the construction of higher-density residential housing.”

The RBA’s sentiment reflects research conducted by insurance group QBE, which forecast property price growth across all major capital cities over the coming years. 


QBE Lenders’ Mortgage Insurance CEO Phil White said that a “discrepancy” between current demand for housing and the timing of future supply of units would result in “greater volatility and upward pressure on property prices”.

In its minutes, the RBA also noted “signs of a turnaround in established housing markets”, particularly in Sydney and Melbourne, which, according to analysts, has come in response to the RBA’s back-to-back reductions in June and July, as well as recent changes to mortgage lending guidance.

According to the latest property price data from CoreLogic, national home values increased by 0.8 per cent in August – the first monthly rise since April 2017.

The bump in home values was driven by a 1 per cent increase in prices across Australia’s combined capital cities, spurred by improvements in Sydney and Melbourne, where prices jumped 1.6 per cent and 1.4 per cent, respectively.

However, despite signs of a recovery in the housing market, the RBA maintained that it remains open to reducing the cash rate further, citing weaker than expected labour market conditions, subdued inflation growth, and global economic uncertainty.


“Based on the information available, members judged that it was reasonable to expect that an extended period of low interest rates would be required in Australia to make sustained progress towards full employment and achieve more assured progress towards the inflation target,” the RBA reiterated.

“Members would assess developments in both the international and domestic economies, including labour market conditions, and would ease monetary policy further if needed to support sustainable growth in the economy and the achievement of the inflation target over time.”

Market analysts are expecting at least one additional cut to the cash rate before the end of 2019, with some, including ANZ Research’s head of economics, David Plank, flagging the possibility of three additional cuts by May 2020, which would take the cash rate to 0.25 per cent.   

[Related: Supply and demand ‘imbalance’ to trigger nationwide price boost]

Investor lull could ‘sow seeds’ of housing ‘upswing’

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

Politicians have traded blows while debating the repeal of responsible lending laws in the lower house, ahead of today’s Senate hearings. ...

The non-bank lender reported an 88 per cent rise in profit and a 14 per cent increase in its loan book over 1H21, despite a drop in the volu...

There was a 26 per cent rise in loans originated through the broker channel at the non-major bank as at 31 December 2020, according to its r...


Join a group of highly informed brokers.

Broker Pulse, a community-driven knowledge base of lender performance Reveal exactly which lenders are making life easiest for brokers and their clients by taking this monthly survey and joining a group of highly informed brokers who leverage these insights every month.


LATEST PODCAST: BOQ’s acquisition of ME Bank

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.