CoreLogic’s daily dwelling values index continues to record solid growth, with values rising by 0.7% over the past 28-days at the 5-city aggregate level:
As shown above, Perth (1.8%), Adelaide (1.1%) and Brisbane (0.9%) are recording much faster value growth than Sydney (0.5%) and Melbourne (0.3%).
On Thursday, we received data on housing finance commitments from the Australian Bureau of Statistics (ABS), which suggested that value growth could soon stall.
The overall value of new housing loans fell by 3.9% to $25.12 billion in January; this followed a 4.1% decline in December.
This result missed economists’ expectations for 2% growth in home loans during January.
The value of new owner-occupier loans fell by 4.6% to $15.91 billion, and lending to property investors was down 2.6% to $9.21 billion.
Meanwhile, lending to first-home buyers was down 6.9%, and the value of those loans fell by 6%.
The next chart shows that the annual growth rate in new housing finance commitments has turned down across all categories:
There has historically been a strong correlation between mortgage finance commitments and dwelling values, as illustrated in the next chart from Justin Fabo at Antipodean Macro:
At the same time, Australia is also experiencing record net overseas migration into a supply-constrained market, which is generated FOMO in the market and is putting upward pressure on prices and rents.
Dwelling values will probably continue to grow moderately over the next two quarters before picking up later in the year when the RBA commences its next interest rate easing cycle.
