Thursday’s Lending to households and businesses release from the ABS revealed that total mortgage lending (excluding refinancings) rebounded strongly in August:
As regular readers of MB will know, we consider the flow of housing and investor finance commitments to be premier indicators for dwelling value growth. This view is based on the incredibly strong historical correlation between finance and prices, as illustrated by the next charts:
As you can see from the above charts, mortgage growth has rebounded particularly strongly across both Sydney and Melbourne, which has driven the housing rebound. This is matched by the strong bounce in auction clearance rates across these two cities:
Given the RBA’s recent interest rate cuts (with more to come), macro-prudential easing by APRA, and announced first home buyer subsidies, our base case is for the rebound in mortgage credit to continue over the near term, with house prices likely to rise well into 2020.
These issues were discussed in detail in our Q3 Subscribers’ Report.