The RP Data CoreLogic Home Value Index results for October were released earlier this week (read results here). The results showed that across the combined capital cities, home values rose by 1.0% over the month, 2.2% over the 3 months to October and 8.9% over the past year. Although home values rose, they only increased in Sydney, Melbourne and Brisbane over the month and in Sydney, Melbourne, Brisbane and Adelaide over the past three months. In a sign that some heat may be leaving the housing market, the rolling annual change in capital city dwelling values has continued to taper, easing to 8.9% over the 12 months ending October ’14 compared with a recent peak in April this year when values were rising at the rate of 11.5% per annum.
The Reserve Bank (RBA) held their monthly board meeting on Tuesday just before the Melbourne Cup. At the meeting the RBA Board decided to keep official interest rates on hold again at 2.5% (the lowest rate in 54 years). It was the 15th consecutive month in which official interest rates were unchanged. The RBA appears relatively comfortable with the level of growth in home values, but has made it clear they are uncomfortable with the level of investment in housing which, based on housing finance commitments, has moved to new record highs in both dollar terms and proportionally. If the statement following the meeting is a guide to the RBAs thinking, it seems unlikely that interest rates will move over the coming months.
The Australian Bureau of Statistics (ABS) released building approvals data for September 2014. Over the month there were 15,004 dwelling approvals nationally and approvals fell by -11.0% over the month. The number of dwelling approvals remains quite high however, after a recent peak of 17,668 approvals in January 2014 approvals were -15.1% lower in September. Both houses and units recorded a fall over the month. The -3.0% monthly fall in house approvals was the largest since April 2012 while the more volatile unit approvals were -21.5% lower over the month which was their largest fall since July 2012. It is important to remember that approvals remain at high levels with 195,571 approvals over the past year, however it does seem as if we have now passed the cyclical peak in the number of approvals. The next thing to watch will be how many of these approvals commence construction and ultimately end up being built.