Panicked buyers run from Australia’s housing market

Equifax has released its Consumer Credit Demand Index for the March quarter of 2022, which revealed that mortgage demand fell for the first time in two-and-a-half years in Q1, down 4.6% nationally:

Mortgage credit demand index

As shown above, the fall nationally was driven by our two largest states – New South Wales (-7.6%) and Victoria (-8.5%) – whose decline in mortgage demand was well above average.

Commenting on the results, Equifax’s General Manager Advisory and Solutions, Kevin James, noted:

“The decline in mortgage demand suggests that factors such as interest rate rises and uncertainty around what impact this will have on the housing market has started to have a tangible impact on consumer behaviour, both for prospective new home buyers and existing mortgage holders. We anticipate demand to slow further as additional interest rate increases are expected in coming months”.

Obviously, this data pre-dates the latest interest rate hike by the Reserve Bank, which should have dampened buyer demand even further.

AMP Capital chief economist, Shane Oliver, believes home buyer demand will evaporate as mortgage rates climb:

“I think the drop in home buyer demand has further to go as interest rates are just starting to rise at a time when affordability is already worsening”.

“The price falls will likely intensify as the pool of buyers dwindles as it gets harder for people to enter the market.”

Accordingly, Oliver is tipping a 10% to 15% top-to-bottom fall in Australian house prices from mid-year into 2024.

Westpac’s “time to buy a dwelling” index has also fallen to its lowest level since April 2008, down more than 40% below its November 2020 peak.

Given Australian interest rates are forecast to rise sharply over the next year and house prices are expected to fall, home buyer demand should crash.

How far it falls will depend how aggressively the Reserve Bank lifts rates.

Unconventional Economist
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  1. DingwallMEMBER

    Nah they need to be panicked such that AirBnB’s, second homes etc are flood onto the market. The while thing needs to burn.

    • I would be very confident that the AirBnB’ers are more susceptible to wages and unemployment, than interest rates.

      I hazard to guess interest rates will take out a tier of other borrowers before the AirBnB’ers are impacted.

  2. DingwallMEMBER

    Westpac’s “time to buy a dwelling” index has also fallen to its lowest level

    Haha right …. it’s fallen from “braindead” level, through “idiotic”, and has fallen to “ludicrous”…….. still a long way to go to get to “slightly over-priced” … let alone “reasonable”

  3. Goldstandard1MEMBER

    15% is the entry level of fall. The drop is the start of the waterfall. Remember that is what is went up by last year so year, it goes down by that at least over next 12 months. I really don’t understand why some people don’t get it.

  4. 1974: Wage share 63:%, wage shares 18%

    2019: Wage share 54% profit share 28%

    Now, we *can* all spend less in accordance with the wage share received… but I suspect this drop in aggregate demand will see a loss of jobs.

    But imagine if you will… for us to spend our ‘old wager share’ of 53%+9%….

    We instead received 53% in hand…. and we had to go through a regime of usury for the other 9%….

    It means we would still spend 63%…. we’re just on the hock for a portion of it, with the concomitant servitude and social caution that came along with being indebted.

    I would imagine if this +9% accrued each year, we would one day reach peak debt…. I can imagine lowering the cash rate would kick the can down the road until the next tier of ‘peak debt’ was reached….

    You can tell when peak debt is reached when the cash rate going from 0.1% to 0.5% spells catastrophe.

    All the usurers and traitorous politicians had to do was leave wage s at 63%, it’d be nice to think we’d identify this, correct this and hold those responsible into account….

    In a world of diversity hires though, no one is accountable.

    • You think some perceived notion of diversity hires to be the root cause of all this?

      Not the system (by design, according to Corman, viz low wages) itself?

      Could you expand?

      • I don’t think diversity is responsible, it doesn’t have the competency.

        I think it prevents accountability.

        • You’re still a brainless clown, talking out of your cake hole.

          Has it not made you curious how the sky didn’t fall in before “diversity” when women were just excluded in general, you know, no meritocracy? There have been no more ships sunk, planes crash or patients die while under surgery now, than there was 50 yrs ago.

  5. OfficeboyMEMBER

    Immigration layering in like a king tide in 2 to 5 years , broken new housing capacity via input pricing ( and the occassional collapse ?) might stiffen up the existing buying. Rates roll back , oil simmers back – and the inflation transients win by then as well. Still the premier APAC location to live in amongst a million ? middle class APAC “refugees” .. call it ahh ?? er ? .. call it say 12% compound property growth from 2025 to 2030 – rough 2X ! whaalla !!

    • Solution is to be selfish, get the tax payer to fund FttH NBN everywhere, then leave the cities to work remotely.

      I mean read that sentence;

      broken new housing capacity via input pricing

      Any student of history understands how broken a culture we have for that to happen.

      This can only come about with a regressive, degenerate society, replete with bureaucracies, diversity hires and no accountability.

      Ween yourself off bureaucracies and diversity hires, move away from them and kill the beast.

  6. “Panicked buyers”??

    More like buyers with half a brain. Or panicked sellers!

    The tables are turning.

    Buyers will have their day finally and all the spoiled little entitled sooks that have just sat on their big fat behinds over the past 20 years and watched their house price go up, are gonna have to put on their big boy pants and deal with a little bit of reality instead of getting free assist after assist from corrupt governments.
    We saw who the real heroes were during 2020-2021- those who risked life and limb and continued working through the pandemic, not fat cat landlords and their obsequious minions.

    • Pointing out that Menzies sits to the left of modern Labor on economic issues is one of my favourite talking points with any major party supporter. Both groups consider it a low blow.

      • Pointing out that Menzies sits to the left of modern Labor on economic issues

        In which way was he to the left? He wasn’t implementing policy of swathes of transfer payments.

        For example, below that Saul Eslake tweet I saw a tweet from Adam Bandt “We will tax Clive Palmer more, so you can pay to fix your teeth”

        Now that is the Left, someone else pays.

        The Right is “We will set economic conditions so you can afford to fix your own teeth”.

        • lolololol “The Right is “We will set economic conditions so you can afford to fix your own teeth”.

          Since when has the Right done that? The Right’s only goal is to reduce taxation down to zero.

          • Since when has the Right done that?

            The Right has done that for time immemorial, all wealthy countries are wealthy due to embracing right wing economic policies. to some degree. It has imperfect distribution I agree, and that is the only reason to have transfer payments as a feature of society..

            The Right’s only goal is to reduce taxation down to zero

            Regardless of political persuasion, this is the aspiration for any society. For example, if the average wage was $200k, under today’s price parity and a low gini coefficient, why would we then elect to have government funded schools?

            The right’s ambition is to everyone to have the opportunity AND responsibility to access the economy how they as individuals see fit.

            I definitely do not want someone as inferior as Mehreen Faruqi or Sarah Hansen-Young intervening in my choices.

        • I really feel sorry for your Chinese wife, I guess you had no choice as no western women would tolerate you. Her life back in Malaysia must have been shit!

    • Absolute BeachMEMBER

      Great thread – much appreciated. We need a Menzies now. Sadly we get what we deserve…..

      • Ailart SuaMEMBER

        “Sadly we get what we deserve…..”

        That’s what they want us to believe. Truth is, we get what they want to give us. The only fix, my friend, is a peaceful revolution resulting in a Constitutional rewrite (by the people), a new electoral system and a total severance of the UK.

        • No, we do get what we vote for! Why did Shorten fail what should have been a romp home? Because he was going to remove a lot of the tax rorts, but no, people are greedy and were seduced by the bribes or the want of the opportunity to make use of those rorts in the future.

          • Ailart SuaMEMBER

            ALP have had more than enough opportunities to repeal property tax ‘rorts’ – but they haven’t. The ‘rorts’ have been around a long time, Dennis. And how do you know Shortens policies at the previous election wouldn’t have ended up like the mining tax?

            So, I gather you wouldn’t back a ‘people’s revolution’ to rid ourselves of the ‘donor element’. Governments are nothing but puppets under this primitive, self-serving, two-horse race. That the majority of citizens don’t have the ability to recognise a sham is our greatest concern.

  7. Tiliqua scincoides

    There are still plenty of good buying opportunities in property, falling enthusiasm and the latest MSM coverage will only make it an even better time to buy.

    I’m getting 11K/yr in positive cash flow from a property I bought last November and rents are rising. This property has also increased in value by $90K in 6 months based of a desktop analysis. Will be rolling it into the next one shortly.

    • Agree.
      I am now old and as impotent as the LNP model for the Federal Corruption Commission, but if I were you I would borrow as much as the Bank allowed and make a generous offer to secure your dream place. It doesn’t matter what you pay today, it won’t make a difference in a decade or two.

    • Go for it, but if you ask me that particular business model is now about as appealing as a bucket of prawns left out in the sun.
      Sure if you have absolutely nothing than you have nothing to lose, so borrow anything the bank will lend. However, if you already have assets, then leveraging them to the hilt is likely to prove to be a costly mistake when the demon we call Inflation raises it’s ugly head.

      • Tiliqua scincoides

        Perhaps, but as long as long as I’m buying cash flow positive properties (which I am) servicing the debt won’t be a problem. Inflation causes rents tot rise too, and hard assets are a hedge against inflation. Over time the value of the will be inflated away.

        • Not against what you’re doing, IMHO it’s last years solution to this years problem.
          If it works for you then great. I’m just more of a change as the world changes kind of guy.

          • Tiliqua scincoides

            I wish we could discuss in more detail. I’d like to understand your position.