Mortgages signal softer property prices

Last week, the Australian Bureau of Statistics (ABS) released housing finance commitments data for July, which rebounded 0.2% after June’s first decline in 9 months:

Mortgages

Mortgage demand still hot.

As regular readers know, the growth in new mortgage commitments has historically been correlated very strongly with dwelling value growth. The reason is straightforward: the overwhelming majority of buyers borrow to purchase a home. Therefore, when mortgage demand rises, so does property prices.

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