The Reserve Bank of Australia (RBA) has released minutes from its monetary policy board meeting earlier this month, outlining its assessment of developments in the residential property market.
The central bank noted that conditions in the established housing market “remained mixed”, pointing to recent falls in dwelling values across Australia’s capital cities.
“Housing prices in some larger cities had declined in June, though were only a little below recent peaks in the case of Sydney and Melbourne,” the RBA noted.
“Housing prices in a number of smaller cities were broadly unchanged.”
The central bank also observed that housing turnover had picked up following the lifting of bans on in-person auctions and open homes.
“Housing turnover declined significantly when in-person auctions and open homes were banned owing to physical distancing restrictions, but as these were lifted, turnover had recovered somewhat,” the RBA noted.
However, the central bank acknowledged weakness in demand for new housing, which it said would remain subdued “for some time”.
“Members noted that uncertainty about job losses had affected the demand for new housing, and building approvals had declined, particularly for apartments,” the RBA added.
But according to the RBA, the federal government’s HomeBuilder package (announced in early June) was helping stimulate demand for detached dwellings.
“Liaison contacts had indicated that the recently announced HomeBuilder package had provided a boost to buyer interest in the detached housing market, but less so for apartments,” the RBA stated.
This comes after the latest ANZ-Property Council research reported a HomeBuilder-driven improvement in confidence among property industry stakeholders in the outlook for the September quarter.
But according to ANZ senior economist Felicity Emmett, the program would not be enough to compensate for the impact of the COVID-19 crisis.
“While the program looks to have had a material impact on the outlook for a majority of businesses in the housing sector, it will not be a panacea for either the residential or overall property markets,” she said.
“And with the outlook still challenging, the economy is likely to need more stimulus in coming months.”
As such, Chris Nicol, analyst at investment firm Morgan Stanley, is expecting the government to introduce more housing stimulus in the months ahead.
“We expect policy support to be tapered but not removed and would expect to see further housing support provided by governments, which should limit the extent of price declines,” he said.