Coldwell Banker Real Estate - South West Realty

The Reserve Bank of Australia (RBA) decided to leave official interest rates unchanged this week following their monthly board meeting. The result being that the average standard variable interest rate remains at the current level of 7.4%. In their statement, the RBA Governor highlighted that, “the global economy has continued to expand over recent months, consistent with a trend pace of growth. The expansion remains uneven, with the major advanced countries recording only modest growth overall, but growth in Asia and Latin America, to date, very strong. There are indications that growth in China is now starting to moderate to a more sustainable rate.”

The Governor’s statement also commented that, “credit outstanding for housing has continued to expand at a solid pace, but dwelling prices are rising more slowly than earlier in the year.” This final comment on dwelling prices has been evidenced by the RP Data-Rismark Hedonic Home Value Index which has recorded much lower levels of growth during April and May of this year. We believe that inflation figures due to be released on the 28 July will be the key determinant of the RBA’s next interest rate move. The ASX Cash Rate Futures Market is currently showing an expectation of a fairly stable interest rate environment over the second half of 2010 with the potential for some easing of official interest rates.

The rpdata.com Market Activity Index has seen a sharp fall over the last week, suggesting that the winter slowdown is upon us. Real estate agent pre-listing activity was at its lowest level since late April during the last week. Moving forward we expect that pre-listing activity will continue to slow up until the spring selling season.

Advertised Stock on the Market

The volume of newly advertised property entering the market over the last week fell by -4.2% after a significant jump the previous week. Although the fluctuations have been somewhat erratic in recent weeks we expect new listings to trend downwards until spring. The total volume of listings recorded an increase of 0.2% last week and this will be an important figure to watch. As the market slows advertised housing stock may continue to mount; total listings are now at their highest level since December 2008.

Latest National Auction Clearance Rates

Nationally, capital city auction clearance rates have softened again last week with the weighted average auction clearance rate recorded at 56.5%. The most surprising factor of these results is that volumes remain so buoyant, despite the fact that clearance rates have been trending down for 11 weeks now. Last week there were more than 1,450 capital city auctions. Clearance rates in the two largest markets weakened last week. Melbourne's auction clearance rate was recorded at 60.6% and Sydney’s was 59.6%

Number of Properties Advertised for Rent

Little has changed with rental listings over the last week with new listings falling slightly (-1.9%) after a sharp rise last week. Total listing also recorded a slight easing of -0.5%. We expect rental markets to tighten in coming months as sales volumes fall and renters find it more difficult to move into home ownership. The RP Data Quarterly Rental Review released this week showed that median rents for houses sat at $350/week nationally and that over the year to June rents have increased by 2.9%.