RBA holds interest rate at 2.5 per cent
It’s perhaps no surprise that the Reserve Bank of Australia has announced that interest rates are staying at 2.5 per cent but it’s always nice to have it confirmed. RBA governor Glenn Stevens says that Australia’s economy is seeing moderate growth and inflation is on target, however there is ‘slack’ in the labour force; meaning wages will only see moderate increases; and there is the decline in the minerals industry. That all means that growth is expected to be slightly lower than the historic trend and Glenn Stevens repeated that a “period of stability” in interest rates was the right policy which should mean good news for home loan repayments. He noted that house prices were still rising, in no small part due to investors looking for good returns but there was no suggestion of any measures to curb this.
Homes have become more affordable
Homes across Australia have become slightly more affordable according to a new report released today. The Housing Affordability Report from Adelaide Bank and the Real Estate Institute of Australia shows that the level of income required to meet home loan repayments has fallen by 0.5 per cent to 30.4 per cent during the September quarter. Unsurprisingly, NSW remains the least affordable state for homebuyers with the proportion of income required to meet loan repayments now 4.1 percentage points above the national average. REIA CEO Amanda Lynch commented: “Although, in some states, potential buyers probably don’t feel that real estate is within their reach given the recent price surges in Melbourne and Sydney, nationally affordability is improving and we are seeing significant and welcomed first home buyer activity in WA.”  First time buyers now make up just 12 per cent of owner-occupiers which is far lower than the average of 19.7 per cent. The report attributes some of the decline to the removal of the First Home Buyer Grant in SA.
New home approvals bounce back
New dwelling approvals bounced back strongly during October following September’s disappointing result according to the Housing Industry Association. Total dwelling approvals rose by 11.4 per cent in seasonally-adjusted terms during October, with a total of 17,062 approvals being recorded during the month. The growth was led by apartments and townhouses with a 30.4 per cent rise, while detached dwellings rose by a very slight 0.3 per cent. Tasmania, Victoria and NSW saw the highest growth in approvals.