SYDNEY, Sept. 20 (Xinhua) -- The last outgoing board meeting chaired by former chief of Reserve Bank of Australia Glenn Stevens ended with board deciding to leave the cash rate unchanged at 1.5 percent.
RBA's minutes of the monetary policy meeting held on Sept. 6 but released on Tuesday revealed that the central bank was not fazed by rising housing prices or by the high auction clearance rates as reported recently.
Average prices for homes on the mainland state capitals have rocketed ahead by 8 percent in the past year, while clearance rates are at a 15-month high.
But the minutes of the RBA's latest monetary policy meeting showed that the central bank was looking below the surface of the numbers.
"Conditions in established housing markets had generally eased over 2016,"it said.
Not only has the growth rate slowed, but rental vacancy rates have risen to around their long-run average.
"Other indicators for the housing market had also pointed to weaker conditions than a year earlier," the RBA said.
Those indicators included a fall in the volume of auctions as well as a drop in the number of transactions in the private treaty market, where a majority of sales are made, and an upward drift in the time taken to conclude them.
And the trend in housing loan approvals had been flat, in line with the recent tightening of credit standards and lower turnover, the RBA said.
This is all before a looming wave of supply of new homes crashes through the market.
"Members noted that there continued to be a considerable volume of apartments scheduled to be completed over the next couple of years, particularly in the eastern states," the RBA minutes said.
The significance of all this for the RBA is that the housing market, despite the superficial signs of strength, would not stand in the way if the central bank saw the need for another economy-boosting interest rate cut.
Commonwealth Bank of Australia economist Savanth Sebastian said it was interesting to note that the minutes suggested that RBA was clearly less concerned about the housing sector or essentially a property bubble was no longer on it's wall of worry.
"Nevertheless policymakers did discuss the substantial lift in apartment building that is taking place particularly across the Eastern states," said Sebastian in a note.
"The pipeline of dwelling construction will support growth however does increase risks of an oversupply of apartments in 12-18 months times," he said.
Sebastian said on an overall basis the minutes seemed to be more of a neutral setting rather than one that suggested further rate cuts were on the cards in the coming months.
"But policymakers are well aware that the low inflation environment provides the central bank with scope to cut rates further if deemed necessary," he said.
"The next round of inflation data is released in late October and essentially means that the mostly likely scenario for another rate cut would be at the November board meeting, provided inflation remains well below the 2-3 percent target band," Sebastian opined.
