Potentially Good News About House Prices for Australians

According to ANZ Bank’s housing credit impulse, a measure of the change in housing credit growth, there was an increase in July. This hints that the recent declines in house prices may moderate in the period ahead.

ANZ said that the Reserve Bank of Australia’s (RBA) private sector credit report for July’s details show the most notable shift an improvement in credit for housing investors which rose 0.1% after decline in June.

“[Despite] credit growth to owner-occupiers slowing to 0.5%, the lift in housing credit was sufficient to boost the housing credit impulse, which tends to lead changes in housing prices.

“While only a single data point, it is a positive sign as a sustained improvement in the credit impulse would be a lead indicator of stabilisation in housing prices,” ANZ said.

While this data is not yet pointing to a stabilisation in property prices, the modest increase suggests stabilisation may occur if the trend in the credit impulse continues in upcoming months. However, ANZ pointed out that one month’s data does not produce a trend.

“The environment remains challenging with lending standards tighter in the past and one of the majors lifting its floating mortgage rate,” ANZ said.

According to the RBA’s private sector credit report, housing credit saw the slowest increase since December 2013 as it grew by 5.5% in the year to July.

Credit extended to owner-occupiers grew by 7.6% over the year, the slowest increase since August last year; and investor credit growth slowed to 1.5%, the weakest level on record.

This deceleration reflects the impact of tougher home loan lending standards, especially for high loan-to-income and interest-only borrowers, along with the ongoing regulator-enforced switch to amortising mortgages and falling prices discouraging buyer demand.

Australia’s median capital city house price has fallen 3.1% over the past year according to CoreLogic, which will release its more comprehensive monthly hedonic home value index for August on Monday.

However, CoreLogic data specifically regarding Brisbane’s home value changes for the year to date has seen a 0.3% increase.