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Housing Market Update

  1. bbm

    2,264 posts.
    From The Sydney Morning Herald.

    House price rises slowing, says Reserve Bank
    November 11 2002

    The recent strong rise in house prices was slowing to a halt in some markets, the Reserve Bank of Australia said today.

    In its quarterly statement on monetary policy, the RBA appeared to be less concerned about house prices rising out of control.

    "While most measures of housing prices rose strongly in the September quarter, there are some signs that price appreciation in particular sectors of the market is starting to abate," the RBA said.

    "Prices of apartments have lagged behind house prices recently, and there are indications that apartment prices in parts of Melbourne and Sydney showed little, if any, increase in the September quarter.

    "Recent anecdotal reports point to a more general waning of buyer interest, and there has been a noticeable decline in auction clearance rates in the past month or so."

    RBA governor Ian Macfarlane has publicly expressed concerns about rocketing house prices, especially in the major capital cities.

    Low interest rates, bigger grants for first home owners, and an influx of investor funds from the weaker stock market fuelled surges in residential property prices of around 20 per cent over the past year, surveys showed.

    Investors played a big part in the building boom, accounting for virtually all the growth in new finance approvals over the past 12 months, the RBA said.

    But many would be disappointed if they expected strong price growth to keep going much longer, it said.

    "Emerging oversupply (is) bound, at some point, to limit the scope for further price increases," the RBA said.

    It said the home building boom was an important factor behind the economy's strength over the past year.

    Rising house prices boosted householders' wealth and the capacity of households to borrow and spend, and enough construction activity remained to keep the sector busy well into next year, the RBA said.

    "But given the emerging oversupply in the sector, housing activity now appears likely to begin declining in the first half of 2003."

    AAP

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