- Australia’s housing downturn looks set to extend into a 13th consecutive month.
- Housing credit growth slowed September, largely due to weaker credit growth to owner-occupiers.
- Despite the slowdown, ANZ’s Housing Credit Impulse — measuring the change in housing credit growth — suggests home price falls will slow markedly in the months ahead.
Australian home prices have been falling for 12 consecutive months. And if the data received so far in October is anything to go by, that stretch looks set to extend into a 13th month when CoreLogic releases its Home Value Index on Thursday.
While many expect home prices will continue to fall well into next year, ANZ’s Housing Credit Impulse suggests the pace of declines will slow markedly in the months ahead.
As seen in the chart below, where this measure moves, home prices tend to follow.
The Housing Credit Impulse measures the change in Australian housing credit growth — the speed of change in essence.
Housing credit growth is the dollar value of outstanding home loans in Australia.
As Jack Chambers and Daniel Gradwell, Economists at ANZ Bank explain, while housing credit growth slowed in September, the pace of the decline also slowed.
“Housing sector credit slowed to 0.3%, largely due to a slight easing in credit growth to owner-occupiers, while investor credit growth was unchanged, albeit at a slow pace,” they said.
“Even with this easing, though, the housing credit impulse, which historically leads changes in house prices, ticked up.
“This is encouraging given that since the impulse reached its cyclical low in June it has improved for three straight months.”
It’s only one indicator, and several others aren’t painting such a rosy picture, but if you’re of the view that credit drives home prices, then perhaps the steepest part of the current downturn is now over.
We’ll all be able to test that theory in the months ahead.
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