The Urban Developer
AdvertiseEventsWebinarsUrbanity
Industry Excellence
Urban Leader
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
Urban Leader Awards Logos RGB White
NOMINATIONS CLOSE SEPTEMBER 12 RECOGNISING THE INDIVIDUALS BEHIND THE PROJECTS
NOMINATIONS CLOSING SEPTEMBER 12 URBAN LEADER AWARDS
LEARN MOREDETAILS
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
ResidentialAna NarvaezTue 18 Jun 19

House Prices Slump as RBA All But Confirms Further Cuts

TUD+ MEMBER CONTENT
6a94d4eb-866a-4c07-903b-2cc79d420485
SHARE
10
print
Print

More than $150 billion has been wiped off the value of Australian homes over the last six months, while the Reserve Bank has all but confirmed further cuts to interest rates.

The official Australian house price figures, released by the ABS on Tuesday, show Sydney and Melbourne driving the slump, with Melbourne recording its first quarterly price fall in seven years.

While Sydney recorded its third consecutive quarter of house price falls and first full year decline since the March quarter 2012. Nationally, house prices declined across all capital cities in the March quarter.

The ABS quarterly figures were released the same day as the Reserve Bank’s minutes, which were hotly-awaited after this month’s rate cut.

RBA members noted that sluggish building approvals — falling more than 20 per cent over the last year, and declining further in April — meant that even a marked turnaround in sentiment would take some time to translate into higher residential construction activity.

Although the pace of price falls in Sydney and Melbourne had eased from earlier in the year, the Reserve Bank said that Perth’s housing market had “declined markedly”.

“Members noted that the housing market was likely to be affected by the removal of uncertainty around possible changes to taxation arrangements relating to housing.

“They also considered APRA’s proposal to amend its requirement to banks to determine the borrowing capacity of loan applicants using a specified minimum interest rate.”

While improving clearance rates suggest that house price declines are stabilising, the Reserve Bank said that it was “too early” to determine the overall effects of increasing clearance rates.

Related: Home Mortgage Arrears Rising, RBA says

Interest rate cuts ‘more likely than not’: minutes

The members all but said outright that there would be further cuts, noting that the outlook was based on the “technical assumption” that interest rates “would be lower in the period ahead”.

“Members agreed that it was more likely than not that a further easing in monetary policy would be appropriate in the period ahead.”

Members retained its focus on the unemployment rate, signalling that developments in the labour market would be “particularly important” when deciding whether further monetary easing was appropriate.

“A lower level of interest rates would support growth in the economy, thereby reducing unemployment and contributing to inflation rising to a level consistent with the target.”

Meanwhile, the RBA’s head of financial stability Jonathan Kearns said that a rise in mortgage arrears do not pose a threat to financial stability.

Speaking at a property industry summit Kearns said that tighter lending standards have made it more difficult for some borrowers to refinance their loans.

Kearns said that reports banks have allowed loans to stay in arrears for longer may be in response to “past poor lending decisions”, although he said it was unlikely that it would explain a significant part of the increase in arrears.

“In an environment of falling house prices, allowing a borrower to remain in arrears for longer would increase the loss that the borrower, and so the lender, is exposed to.

“This wouldn't seem to be operating in the best interests of the borrower, or for that matter even the lender.”

ResidentialAustraliaFinancePolicyReal EstateSector
AUTHOR
Ana Narvaez
The Urban Developer - Editorial Director
More articles by this author
ADVERTISEMENT
TOP STORIES
Fortis’ display suites are designed as brand environments first, with tactile details and curated design to build buyer confidence before project specifics.
Exclusive

Relevant or Redundant: Will Tech Kill Display Suites?

Vanessa Croll
7 Min
Exclusive

Missing Heart: Why The Gold Coast Needs a CBD

Phil Bartsch
7 Min
Traders in purple Northsea Wollongong EDM
Exclusive

Affordable Housing Bonus Drives Mixed-Tenure Momentum

Clare Burnett
6 Min
Exclusive

Industry Stoush Looms Over Construction Code Pause

Patrick Lau
4 Min
Exclusive

New Wave of Capital Washes Over Evolving Surf Park Sector

Phil Bartsch
11 Min
View All >
Sponsored

Future-Proofing Olympic Venues Starts Right Now

Partner Content
Landmark's amended proposal for a Macquarie Park tower is on exhibition
Residential

Landmark Plots Doubling Height of Mac Park Tower

Patrick Lau
MA Financial Roundtable HERO
Exclusive

Under the Spotlight: Private Credit Faces Its Biggest Test

Vanessa Croll
Developers and lenders weigh up speed, risk, and looming regulation in a market reshaping how projects get built…
LATEST
Planning

Future-Proofing Olympic Venues Starts Right Now

Partner Content
6 Min
Landmark's amended proposal for a Macquarie Park tower is on exhibition
Residential

Landmark Plots Doubling Height of Mac Park Tower

Patrick Lau
2 Min
MA Financial Roundtable HERO
Exclusive

Under the Spotlight: Private Credit Faces Its Biggest Test

Vanessa Croll
7 Min
Redcliffe Affordable/Social WA EDM
Affordable & Social Housing

Builder Appointments Pave Way for WA 1100-Home Scheme

Clare Burnett
2 Min
View All >
ADVERTISEMENT
Article originally posted at: https://www.theurbandeveloper.com/articles/house-prices-slump-as-rba-all-but-confirms-cut-