RBA governor hints at long term low rates
The governor of the Reserve Bank of Australia has hinted that low interest rates are here for some time; possibly years. Speaking at a Committee for Economic Development of Australia dinner Glenn Stevens said that with the downturn in the mining industry and high levels of household debt, together with rising unemployment, the conditions are not right for interest rate rises. He was also keen to stress that any measures to cool the housing market would not be targeted at the construction industry which, he said, was helpful in slowing rising house prices.
Property auctions continue to deliver
Business is brisk at the property auctions with clearance rates steady and reserves being exceeded. Despite an increase of 14 per cent in the number of properties being sold in the auction houses figures from RP Data show a preliminary clearance rate of 69 per cent for this past weekend. Sydney leads the way with 75 per cent clearance; Melbourne and Perth are at 66.7 per cent; Adelaide cleared 66 per cent; Canberra 60.7 per cent; and Brisbane 45.3 per cent.
Economist predicts house prices to slow through into 2015
With a slowdown in prices already showing in some areas, a senior economist for Bank of America Merrill Lynch says that will continue to be the case into 2015. Saul Eslake says that new regulations being considered by the APRA and RBA will have an additional effect. While the low interest rates are expected to continue until the second half of next year, Eslake says that affordability will bring the prices down. House prices are soaring ahead of income in some key markets but that is viewed as unsustainable despite the levels of investors in the market.
Chinese investment in property to rise says Ernst & Young
Chinese investment in Australian real estate will escalate over the next five years according to Ernst & Young’s transactional services leader. Ross Hamilton has told The Australian that over the last seven years Chinese investment has been $24 billion but that it’s expected to rise to $8 billion per year through to 2020.