In upcoming few months Australian Property market is about to stop in the price growth and there is possible risk of quite sharp drop-off.  The main factor affecting this drop in prices will be the household lending activity which is likely to reach its peak in next months.

There has been significant change in the value of loan approvals. Since April the loan approval has been rising from 1.3 percent to 13.4 percent what is totally below expectations of the market. This growth has been mainly influenced by higher loan sizes. In case of investor loan approvals, since April the percentage rose from 2.3 to 30 higher over the year.

However, it might not be immediately apparent but the pace of growth slowed down significantly for both, owner-occupiers and investors. Low rates of the interest encouraged the owners and investors to bring their purchases forward but it creates a void which must be filled eventually.

The effect of the Australian growth in prices will results in big disadvantage for young Australians and especially first home buyers. According the market research this is unlikely to change or improve in any positive way for Australians in near future in one hand with other elements in the game, such as, subdued labour market and negative salary growth. For Australia is this the worst recession since last one in 1990s, except the global financial crisis with the immediate aftermath.

From the demographic perspective the regions which drove the most of the recent gains in house prices are New South Wales and Victoria. In Queensland and Western Australia the demand is continuing to grow.  The housing loans are continuing to rise and the important question is what is going to come in the future? How are we going to fill the void when demand of the investors will be decreasing?