The Reserve Bank is now expecting a firmer economic recovery with monetary policy measures and government stimulus boosting the nation’s economy over the coming year.

House prices have increased in most cities and regional Australia over recent months, and despite declines seen in Melbourne the property market has generally remained resilient since the onset of the pandemic.

The availability of finance at low rates has been one-factor supporting demand for housing in Australia, the RBA said.

In its statement on monetary policy released Friday about its historic November meeting, the bank said that despite the somewhat better recent outcomes, a recovery was expected to be “bumpy and uneven, and highly sensitive to further virus outbreaks”.

The central bank, which introduced a package of measures at its Tuesday meeting, cut the cash rate target to 0.1 per cent—the lowest in Australia’s history, in its bid to support a recovery.

In January the official cash rate was 0.75 per cent, with the bank’s latest move signalling the third rate cut this year.

Each of the big four banks have responded to the RBA’s cut, with ANZ the last major to announce its response.

While measures were taken on fixed loan rates, CBA and ANZ said variable rates will remain unchanged, NAB and Westpac made no mention of changes to variable rates.

Australia's housing values increased for the fist time in five months, up 0.4 per cent in October, with Melbourne the only capital city recording a decline.

Finance availability at record low rates has been one-factor supporting housing demand, the central bank's latest statement said.

“Consistent with this, new commitments for housing finance have recovered significantly, and housing credit growth has also picked up, most notably to owner-occupiers.”

Approximately half of the rise in September’s owner-occupier housing loan commitments was for the construction of new dwellings, a 25.3 per cent rise, which the ABS stats show are at historically high levels.

The Home Builder subsidy has also supported demand for new housing, despite the lower near-term outlook for population growth.

In its monetary statement, the RBA noted that rental markets remain soft, with advertised rents, especially for apartments, declining in major capital city markets Sydney and Melbourne.

After contracting by 4 per cent over 2020, GDP is expected to increase by around 5 per cent over 2021 and 4 per cent over 2022.

This would bring GDP back to its end-2019 level by the end of next year, still well short of the path expected prior to the pandemic outbreak.

Importantly, unemployment is now forecast to peak around 8 per cent this year rather than 10 per cent, although it is still tipped to remain around 6 per cent in two years’ time.

A shallower downturn is forecast over the September and December quarters of 2020 with a stronger rebound over the first half of next year.