The housing market is responding to cash rate cuts which began in November 20011 says the RBA in its February statement on monetary policy released today.
While warning that near-term prospects for business investment outside the mining sector continue to be subdued, the RBA said there are “signs that the housing market is responding to the series of interest rate cuts over the past 15 months”.
“Since the middle of 2012, residential building approvals have increased, rental yields have moved higher and prices in the established housing market have picked up,” added the RBA.
The RBA notes other positive developments in the housing market.
“Overall, improving conditions in the housing market are expected to continue to provide support to dwelling investment, while non-mining business investment is forecast to pick up gradually over time.”
And it provides commentary on the improvement in capital city house and unit prices.
“Australian capital city dwelling prices have risen by 4% since their trough in mid-2012.
“Recent price rises have been relatively broad based, with all state capitals recording higher prices over the three months to January.
“Some other indicators also point to a strengthening in the established housing market. Auction clearance rates in Sydney and Melbourne have continued to rise from their lows in late 2011 and early 2012.
“Private sector surveys indicate that, on balance, households expect house prices to rise further over the year ahead. Housing loan approvals increased moderately over the second half of 2012, underpinned by loans to investors and repeat buyers, although they were little changed relative to the outstanding stock of housing credit," says the RBA.