The Assistant Governor of the Reserve Bank, Philip Lowe has spoken at the Australian Economic Forum about the changing patterns in household saving and spending. Of particular interest were his comments on housing tenure. He pointed out that the saving ratio has increased for renters, mortgage holders and for those that own their own property outright. But the increase in saving has been the smallest for households that own their property outright.
The Reserve Bank Board has released the minutes of the September monetary policy meeting. The financial position of the household sector added to the Board's decision to leave the cash rate unchanged. They noted the mortgage arrears rate had drifted up over the first half of the year. By international standards the level is still low. The rise in defaults mainly related to loans taken out before 2009, when banks' lending standards were weaker. Newer loans were performing well despite an increase in interest rates. The board also discussed the weakness in the housing market. Nationwide measures of dwelling prices fell again in July, 3 - 4 per cent below their peak late last year. Building approvals were flat in July, well below average. Building activity had been much stronger in Victoria than in other states in recent years.
On that note, the increase in development has left Melbourne with 10,000 vacant rental properties reports SQM Research. The result is slowing rental growth and a dip in rental yields on investment properties. Melbourne's vacancy rate is 2.8 per cent compared to the national average of 1.8 per cent for August. Canberra faces the worst shortage, with only 0.6 per cent of rental properties vacant.
Meanwhile, the Australians for Affordable Housing launched a report stating that we're paying more than we can afford for housing. In Sydney it takes more than 8 times the average annual income to afford a house, up from 5.6 times a decade ago. The report also found that half of low-income home owners are experiencing mortgage stress.
And more than a third of Australians believe it's a good time to buy a home according to the Genworth homebuyer confidence index. 36 per cent say now's the time to enter the property market. The report also reveals the number of Australians suffering from mortgage stress rose from 21 to 25 per cent this month.