House price inflation “remained robust”: RBA’s August minutes

Conditions in the established housing market remain strong, according to latest meeting minutes from the Reserve Bank of Australia.

“While house price inflation across the country in 2014 had not been as rapid as over the second half of 2013, it had remained robust,” the August minutes noted.

“Auction clearance rates in Sydney had eased from their high levels in late 2013, although they had increased in Melbourne more recently.”

Members also observed that residential dwelling approvals had declined somewhat in recent months, but remained at a high level and, in combination with the substantial amount of residential work yet to be done, suggested that dwelling investment was likely to remain strong in the period ahead.

“Staff forecasts suggested that inflation, despite recent higher readings, was likely to be consistent with the 2–3% target over the next two years.

“Members noted that there was inevitably a significant degree of uncertainty about the outlook, given the number of forces working in different directions.

“The Board judged that monetary policy was appropriately configured and that, on present indications, the most prudent course was likely to be a period of stability in interest rates.”