Last week’s mortgage commitments data for May from the Australian Bureau of Statistics (ABS) revealed a brutal 11.6% decline, led by a precipitous 15.6% fall in investor mortgages:
The following charts plot this data against CoreLogic’s dwelling values index for June. These charts provide a useful guide to short-term price movements for the market, given the historically strong correlation between mortgage credit growth and dwelling values.
First, the national picture is presented below, which shows annual mortgage growth also falling in May alongside falling dwelling value growth:
As shown above, every time dwelling values hit a turning point, they tend to trend up/down for an prolonged period. Therefore, based on this historical experience, prices should decline for a considerable period.
Below is the same data across Australia’s major capitals:
It’s a similar story across Australia, with annual mortgage growth turning down and dwelling value growth falling across Sydney, Melbourne and Perth; albeit still rising across the other major capitals.
With jobs, incomes and spending decimated across the economy, a renewed lockdown in Melbourne, collapsing immigration, and rising vacancies, the Australian housing market is facing gale forced stiff headwinds.
Melbourne is most exposed, given its extreme reliance on immigration and wounded economy.
