Top end prices in Sydney and Melbourne fall the most, while little change for lower-priced properties: RBA minutes

In the July meeting minutes, the RBA discussed the Sydney and Melbourne housing markets decline.

The minutes suggested house prices had fallen by almost five percent in Sydney over the preceding year after its significant increases in previous years.

"Members observed that prices in Sydney and Melbourne had fallen the most for more expensive properties, while prices of lower-priced properties had been little changed, consistent with the typical pattern of larger fluctuations in prices at the higher end of the market," the minutes read.

"In the other state capitals, housing prices had been fairly steady, with the exception of Hobart, where prices had picked up markedly given strong demand and supply constraints."

The members noted that data from the national accounts suggested dwelling investment had peaked in late 2016, although residential construction cycles had differed significantly across the states.

"In New South Wales, dwelling investment in higher-density projects had remained at a high level since the beginning of 2016," the minutes read.

They said liaison contacts had suggested there were capacity constraints in Sydney, which meant that, given the large amount of work in the pipeline in New South Wales, construction activity was likely to remain at a high level for some time.

The minutes noted that dwelling investment in Victoria was also likely to remain at a high level for some time.

"Members noted that more of this activity had been in detached dwellings and that ‘greenfield’ land sites had generally been more readily available in Victoria.

"By contrast, the construction cycle for apartments had clearly passed its peak in Queensland, while detached housing construction in Western Australia might have reached a trough.

Growth in household income had remained low compared with the average of the preceding 20 years, the members suggested, with household income remaining subdued over the most recent couple of years.

Growth in labour income had increased to its highest rate since 2012, in line with solid growth in employment.

Wages growth remained low, consistent with ongoing spare capacity in the labour market and some structural forces that had also been evident in other economies.

To read the full minutes click here.