The Reserve Bank of Australia (RBA) has provided further certainty to homeowners by keeping interest rates on hold once again, although separate data out on Tuesday shows building approvals are continuing to decline.
The central bank kept official rates steady at a record low 2 per cent, holding the same course since it last cut the cash rate in May, 2015.
RBA governor Glenn Stevens said the economic signals in Australia showed it was appropriate for monetary policy to be accommodative.
“Low interest rates are supporting demand, while supervisory measures are working to emphasise prudent lending standards and so to contain risks in the housing market,” he said. “Credit growth to households continues at a moderate pace, albeit with a changed composition between investors and owner-occupiers.
“The pace of growth in dwelling prices has moderated in Melbourne and Sydney and has remained mostly subdued in other cities. The exchange rate has been adjusting to the evolving economic outlook.”
Immediately following the announcement, the Australian dollar was trading at just over US71 cents.
Mr Stevens said that over the period ahead, new information should allow the RBA board to judge whether the improvement in labour market conditions is continuing and whether the recent financial turbulence portends weaker global and domestic demand.
“Continued low inflation would provide scope for easier policy, should that be appropriate to lend support to demand.”
But low interest rates do not seem to be enough to entice homebuyers into the market, judging by Australian Bureau of Statistics (ABS) data showing that the number of dwellings approved fell 1 per cent in January in trend terms, continuing a 10-month decline.
Dwelling approvals decreased in January in the ACT (11.3 per cent), Northern Territory (9.5 per cent), NSW (3.5 per cent), Western Australia (1.8 per cent) and Tasmania (1.7 per cent), but increased in Victoria (1.3 per cent), South Australia (0.3 per cent) and Queensland (0.1 per cent) in trend terms.
The seasonally adjusted estimate for dwelling approvals fell 7.5 per cent in January following an 8.6 per cent rise in December. The fall in January was driven by both houses (6.1 per cent) and dwellings excluding houses (9.1 per cent).
The ABS said the largest contributors to the overall fall in seasonally adjusted total dwelling approvals by state were NSW (22.9 per cent), Queensland (13.3 per cent) and Tasmania (11.1 per cent).