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Reserve Bank of Australia releases Statement on Monetary Policy

ByDarren McCoy

The Reserve Bank of Australia (RBA) released its Statement on Monetary Policy on February 6, and commentary about the nation’s property market may interest buyers and sellers of real estate.

The RBA noted that despite investments in dwellings, this only made a “minor contribution” to economic growth over the first three quarters of 2013.

However, it did acknowledge that a “strong increase in approvals for residential buildings points to a pick-up in investment in the coming year”, which may pique the attention of property investors looking to secure further property interests in the coming year.

Increasing home prices

Real estate in Perth, Sydney and Melbourne saw impressive growth last year, as more and more homeowners and investors sought to get into these booming markets.

According to the monetary policy statement, “low lending rates and the continued strength in the established housing market are providing support to new dwelling activity”.

Competitive home loan rates have made securing property easier for more Australians, and the trend may well continue with the RBA’s recent announcement to keep the cash rate at 2.5 per cent.

The RBA’s statement pointed out that house prices increased by 10 per cent last year. In the December quarter alone they grew by 4 per cent.

“Demand for established housing has been strong by both investors (particularly in New South Wales) and repeat-buyers, with the value of loan approvals to these buyers increasingly strongly over 2013.”

Furthermore, though housing credit growth has been “low by historical standards,” the statement pointed out that an upturn is evident, with growth slowly picking up.

It was acknowledged that this gentle increase may be beneficial to investors.

Broadening growth

Considerations on where to buy property may be influenced by the RBA’s statement.

According to the statement, the growth in housing prices has broadened, particularly in recent months.

There were “sizeable price increases” in every capital of Australia during the December quarter, led by strong interest in the Sydney market.

While the rest of the country had average growth of 10 per cent, Sydney saw 13 per cent growth, tipping it as a hot market for buyer and seller activity.

Property investors will find comfort in vacancy rate declines – with a nationwide drop to 2 per cent in the September quarter.

This figure is not as low as the admirably minute levels of 2007, however it is certainly lower than the long-run average, which is good news for investors looking to keep their properties occupied to obtain maximum rental yields.

Article first appeared on, and is courtesy of, raywhite.com.

Image courtesy of Australian Real Estate Sale.

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