The fall in the number of home loan approvals continue to accelerate with a 7.9 percent fall in January, the biggest fall for a decade. This follows a revised 5.1 per cent drop in December.
As we highlighted in last month’s post, No ‘pent up’ demand for Mortgage Approvals, it appears house prices lag mortgage applications. Falls in 2003 and 2008 resulted in falls in house prices.
The next coming months will be crunch time for the Australian Housing Asset Bubble. While demand for Australians buying our own housing is falling, cashed up Chinese land bankers may be able to keep our market on life support. We are also getting close to a May budget and being an election year, no doubt the government will do everything in its control to prevent falls.
Many of the stimulus measures put in place in 2008 during the GFC are winding down, and as expected they could only delay the inevitable. If Australian households were spending beyond their means in 2008, governments throwing more spending money was never going to make the problem sustainable. In fact the generous First Home Buyer Grants only helped fuel the household debt bubble, helping us to break through the $1 trillion mark and throwing more households into mortgage stress at a time of record low interest rates.
» Home loans slump most in a decade – The Sydney Morning Herald, 10th March 2010.