On Friday, the Australian Bureau of Statistics (ABS) released housing finance commitments data for August, which registered a seasonally adjusted 4.3% decline with annual growth also falling sharply:
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.
There are 1241 words left in this subscriber-only article.
Get your first month for $1
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 main capital city markets.
The quarterly growth in new mortgage commitments has faded from recent highs. Capital city dwelling value growth has also slowed from a quarterly peak of 7.1% in May to 4.6% in September:
Quarterly mortgage growth across Sydney has fallen and remains well below the recent peak. Dwelling value growth is also slowing, down from a quarterly peak of 9.3% in May to 5.7% in September:
Melbourne’s quarterly new finance commitments have fallen sharply and quarterly price growth has also moderated from a peak of 5.8% in April to 3.3% in September:
Brisbane’s quarterly new finance commitments have also fallen sharply. However, quarterly price growth has remained relatively stable, down from a peak of 6.6% in May to 6.0% in September:
Perth’s quarterly finance commitment growth has gone negative and quarterly price growth has also fallen sharply from a peak of 7.7% in March to 1.2% in September:
Finally, Adelaide’s quarterly finance growth has turned negative. However, Adelaide’s quarterly price growth has remained stable at 5.5%:
In summary, new mortgage growth has faded across all major markets, which based on historical correlations points to slower value growth.
That said, we are getting some weird readings out of Brisbane and Adelaide, given mortgage growth has fallen sharply there but price growth has barely budged.