by Alan Thornhill
Australia’s housing markets – and its economy – presented distinctly mixed pictures today, as member of the Reserve Bank board met to review interest rates.
Some economists expect the board to cut the bank’s marker interest rates by another 25 basis points today, taking it to a new low point of 1.5 per cent.
However, the late advice they received today, shows that their choice will not be easy.
The Housing Industry Association, for example, reported that new home sales had bounced back in June.
It’s Chief Economist, Dr Harley Dale conceded that“The overall trend, reflected in a report his association published today “is still one of modest decline for New Home Sales.
However he added that “…a bounce of 8.2 per cent in June 2016 highlights the resilience of the national new home building sector.”
“The overall profile of HIA New Home Sales is signalling an orderly correction to national new home construction in the short term, as are other leading housing indicators,” Dr Dale said.
Meanwhile Corelogic, which studies property prices and rents, reported that while capital city dwelling values had reached a record high in July, rental yields had slipped to a record low.
The firm’s research head, Tim Lawless, said: “the recent moderation in the rate of capital gains should be viewed as a positive sign that growth in dwelling values may be returning to more sustainable levels.
“However, the growth trend rate is still tracking considerably faster than income growth resulting in a deterioration of housing affordability.” He added.
HIA New Home Sales bounce back in June.
The HIA New Home Sales Report, a survey of Australia’s largest volume builders, shows that total new home sales ended 2015/16 on a higher note, said the Housing Industry Association – the voice of Australia’s residential building industry.
“The overall trend is still one of modest decline for New Home Sales, but a bounce of 8.2 per cent in June 2016 highlights the resilience of the national new home building sector,” commented HIA Chief Economist, Dr Harley Dale.
“The overall profile of HIA New Home Sales is signaling an orderly correction to national new home construction in the short term, as are other leading housing indicators,” he noted Harley Dale.
“Below the national surface, the large geographical divergences between state housing markets have been a prominent feature of the current cycle – that will continue.
The New Home Sales series highlights this fact.
Comparing the June quarter this year to the same period last year, detached house sales are down very sharply in South Australia (-21.4 per cent) and in Western Australia (-27.5 per cent), yet sales are up by 17.0 per cent in Victoria and by 7.1 per cent in Queensland. New South Wales rounds off the detached house coverage provided by the New Home Sales report and sales are down by 7.3 per cent on an annual basis.”
The sale of detached houses bounced back by 7.2 per cent in the month of June 2016. ‘
Multi-unit’ sales continued their recent recovery, growing by 11.5 per cent after a lift of 4.9 per cent in May. In the month of June 2016 detached house sales increased in all five mainland states with the largest increases occurring in Queensland (+14.9 per cent) and WA (+9.1 per cent).
Detached house sales increased by 7.5 per cent in NSW, 3.7 per cent in South Australia, and 2.2 per cent in Victoria.
Business confidence seems set to improve,
The latest Dun and Bradstreet business expectations survey, which was also published today, showed that Business expectations for sales, profits and employment have all bounced back for the three-month period to 31 December 2016.
The firm said this is surprising, in view of the British vote to leave the European Union.
Weathercoast by Alan Thornhill
A novel on the murder of seven young Anglican Christian Brothers in the Solomon Islands.
Available now on the iTunes store.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
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