Data released last week by the Australian Bureau of Statistics (ABS) showed that the value of mortgage commitments tanked by 8.5% July, to be down 11.3% year-on-year. This decline in mortgage commitments captured the first three Reserve Bank of Australia (RBA) rate hikes – i.e. 0.25% in May and 0.50% in June and July – but obviously does not capture the 0.50% hikes in August and September. Australian dwelling values have fallen sharply since the RBA’s first hike, with values down 4.6% at the 5-city aggregate level, driven by sharp declines across Sydney (-7.7%) and Melbourne (-4.8%), with Brisbane values (-3.2%) also lower:The growth in new mortgage commitments has traditionally been a strong leading indicator for house price growth. Therefore, we should expect that FOOP will intensify, buyers will remain on the sidelines, mortgage demand will fall, and Australian house prices will continue to fall.

Source: Stuff September 08, 2022 02:33 UTC