RBA: New dwelling investment to lift
The Reserve Bank of Australia (RBA) has released the minutes of its early June Monetary Policy Meeting.
During the meeting, the RBA elected to maintain the record-low 2.5 per cent cash rate, allowing investors and home buyers to access affordable mortgage rates.
The minutes provide valuable insight into the Australian economy and potential for future growth. It appears the investment in new dwellings could be a driving force for the nation in months to come.
"Forward-looking indicators of new dwelling investment were at high levels relative to recent years," the board stated.
However, despite this, there has been a decline in building approvals over recent months. Increasing housing stock will benefit home buyers looking for more choice, while a decline in building approvals puts those with a real estate investment portfolio in a better position than those without such leverage.
During the March quarter, resource exports showed strong growth. However, mining investment dropped during the same period which highlights the importance of a healthy construction sector.
The RBA also commented on housing market prices, which is sure to interest those paying attention to some of Australia's key capital cities.
"In the established housing market, dwelling price growth had eased from the rapid pace seen in 2013 and auction clearance rates in Sydney and Melbourne had declined from the high rates that prevailed during much of 2013," the RBA said.
Slowing growth and a dip in auction clearance rates could lead to better housing affordability, which may come as a relief to homeowners in these increasingly popular cities.
Coupled with cheap home loans that continue to be available thanks to the 2.5 per cent base interest rate, now could be the time to act and invest or upgrade.
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