From Leith van Onselen
Among all of the factors that drive house price growth, arguably the most important is the flow of housing finance commitments, which has shown an incredibly strong correlation with dwelling price growth over recent decades.
The above chart tracks RP Data’s annual dwelling price growth at the 5-city level against total Australian housing finance commitments (excluding refinancings), and shows a strong correlation with the exception of the past year, where the two series have diverged….
Leith highlights the reason for the recent divergence: strong presence of foreign property buyers in Sydney, Melbourne and Brisbane. But with China ramping up capital controls to support the Yuan, how long is this going to last?
Source: The best indicator of house prices points down – MacroBusiness