The best indicator of house prices points down


By Leith van Onselen

Among all of the factors that drive house price growth, arguably the most important is the flow of housing finance commitments, which has shown an incredibly strong correlation with dwelling price growth over recent decades.

ScreenHunter_12022 Mar. 15 06.37

The above chart tracks RP Data’s annual dwelling price growth at the 5-city level against total Australian housing finance commitments (excluding refinancings), and shows a strong correlation with the exception of the past year, where the two series have diverged.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.