Australia just received some positive news on home prices -- of sorts

Shaun Botterill/Getty Images
  • The value of outstanding home loans in Australia rose by 0.4% in July, up from 0.3% in June.
  • The modest increase was enough to lift ANZ Bank’s housing credit impulse, an indicator that tends to lead movements in home prices.
  • Despite the improvement, ANZ says the environment for the housing market “remains challenging”.

There’s been a lot of negative news around surrounding Australia’s housing market in recent months. From prices to approvals, lending or auction clearance rates, finding something positive is as rare as hen’s teeth.

Well, there’s finally been some good news.

Of sorts.

According to ANZ Bank’s housing credit impulse, a measure of the change in housing credit growth, ticked higher in July, hinting that recent price declines may moderate in the period ahead.

ANZ Bank

“Within the details [of the Reserve Bank of Australia’s (RBA) private sector credit report for July], the most notable shift was an improvement in credit for housing investors, which rose 0.1%, after declining in June,” ANZ says.

“[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.”

So while it’s not yet pointing to a stabilisation in prices, the modest increase suggest that may occur if the trend in the credit impulse continues in the months ahead.

However, one month’s data does not make a trend, something ANZ was quick to point out.

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

According to the RBA’s private sector credit report, housing credit — essentially the outstanding value of housing loans — grew by 5.5% in the the year to July, the slowest increase since December 2013.

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

The deceleration largely reflects the impact of tougher home loan lending standards, especially for high loan-to-income and interest-only borrowers, as well as 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.

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