Australian economic data from the past week shows the housing recovery is continuing, according to AMP Capital chief economist Shane Oliver.
Despite a small fall in February, building approvals remain close to record highs and new home sales remain solid, pointing to continued strength in dwelling construction, Mr Oliver said.
“While home prices continued to rise in March this was concentrated in Sydney, with other cities decidedly soft, indicating that despite the hoopla, home price momentum overall is waning,” he said.
“It is also noteworthy that there has been some modest loss of momentum in investor housing credit.”
As a result, Mr Oliver believes the housing market may be becoming less of a constraint on the RBA’s flexibility to cut interest rates again.
Meanwhile, homebuilding continues to gather momentum across the nation.
The Australian Bureau of Statistics reported that 18,768 dwelling units were approved in February, a 14.3 per cent increase on the previous year.
Private sector house approvals fell 1.0 per cent in February; however, there was a 36.2 per cent jump in approvals for all other private sector dwellings, primarily units.
Housing Industry Association senior economist Shane Garrett said housing approvals remain at exceptionally high levels and that there is a solid pipeline of activity for the months ahead.
“A steady pipeline of new homes represents the most effective solution to alleviating housing affordability pressures,” he said.