The RBA Board Minutes just released today offer a very balanced picture of housing market conditions:
"Information on the housing market suggested that conditions remained buoyant. Nationwide capital city price growth was running at around 1 per cent per month in early 2010, and auction clearance rates had remained high in March, especially in Melbourne. Members discussed the factors contributing to the recent strong price growth. On the demand side, population growth was strong, households had confidence about future income growth, and mortgage rates were at below-average levels. At the same time, the supply of new housing was not expanding sufficiently, partly because of the land usage policies of local and state governments and also because of the tightness of finance for developers. Members also noted that the current price growth was somewhat at odds with the falls in housing loan approvals over recent months.
Credit to the household sector had recently continued to grow at a moderate pace of around 0.7 per cent per month. The decline in business credit had slowed noticeably in early 2010, suggesting that the period of corporate deleveraging was coming to an end. This was consistent with information from liaison, which had pointed to a gradual easing in financing conditions for businesses."
