The continued discrepancy in house price growth across Australian property markets was likely a major talking point as the Reserve Bank of Australia decided to leave Australia’s official cash interest rate at 2% at theirt board meeting today.
Head of research at CoreLogic RP Data Tim Lawless believes the RBA board is mindful of the fact that other markets are not seeing the same level as growth as Sydney and Melbourne and will wait to see if regulatory efforts can slow growth and investor demand in those two markets, rather than intervene themselves.
“With dwelling values continuing their stellar run of growth through July, the housing market was likely to be a key topic of conversation for the Reserve Bank when they deliberated the cash rate today,” Lawless said
“While growth conditions remain exceptionally strong in Sydney and Melbourne, the other capital city housing markets are seeing much more benign rates of capital gain,” he said
“Highlighting the fact that low interest rates aren’t having as strong a stimulatory effect on housing market conditions outside of Sydney and Melbourne, the third highest rate of annual capital gain across the capital cities was Brisbane where dwelling values have increased by only 3.9% over the past 12 months and values are falling in Darwin
“Rather than lifting interest rates in an effort to slow down the pace of appreciation in Sydney and Melbourne home values, the RBA will be looking towards recent prudential supervisory activities by APRA to dampen investment demand which should assist in slowing the rapid pace of value growth across Australia’s two largest cities.”
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