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:
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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Below are a series of charts tracking the annual growth of new mortgage commitments by value against annual dwelling value growth nationally and across the five main capital city markets.
The quarterly growth in new mortgage commitments has slowed from recent highs but remains at a strong rate overall. In a similar vein, capital city dwelling value growth has also slowed from a quarterly peak of 7.1% in May to 5.1% in August:
Mortgage growth retraced in July across Sydney and remains below the recent peak. Dwelling value growth is also slowing, down from a quarterly peak of 9.3% in May to 6.4% in August:
Melbourne’s new finance commitments have fallen sharply and quarterly price growth has also moderated from a peak of 5.8% in April to 4.0% in August:
The immediate outlook for Brisbane is for softer value growth based on the large quarterly fall in new mortgage commitments. At this stage, quarterly price growth has remained stable:
Like Brisbane, mortgage demand growth has fallen heavily in Adelaide. At this stage, however, value growth has faded only slightly:
In summary, new mortgage growth has faded across all major markets, which points to slower value growth.
Note: Perth’s dwelling values index has been temporarily suspended while anomalies are investigated.