Property:Is it cooling?

It is still too early to say whether recent indications suggest that Australia’s residential property market is cooling.

That’s the conclusion the Reserve Bank’s Assistant Governor (Economic) Philip Lowe presented to a conference in Sydney yesterday.

Mr Lowe said Australia’s economic recovery generally presented a strong picture.

However, there were “a few contrary signs.” he added.

“Total housing loan approvals declined in October, November, December and January,” he said.

And the declines had  been broader than than just first home buyers  retreating after the scaling back of the Federal government’s  stimulatory grants.

“Some lenders have also tightened terms and conditions,” Mr Lowe said.

They had done that by further reducing maximum loan to value ratios.

“…in the lower priced suburbs of capital cities, housing prices have broadly moved sideways since October,” Mr Lowe said.

But this had followed “earlier significant rises.”

“Looking forward, it is too early to tell whether these contrary signs indicate that some cooling in the property market is in prospect,” Mr Lowe said.

“It is, however, important to avoid significant imbalances developing in the property market,” he added.

Mr Lowe said that applied to the supply-demand situation, pricing and “financing dynamics.”

“The pick up in dwelling construction that is occurring will be helpful here,” Mr Lowe said.

But he warned that “further increases are likely to be needed over the medium term.”

More at www.rba.gov.au