UK rents rise
It's always worth watching what happens in the UK housing market, not least because the United Kingdom is a little further down the macroprudential road than Australia.
In Britain the disruptive Mortgage Market Review rocked the sprightly housing market back on its heels, before activity reasserted itself and prices began to rise again.
In the end it will be a combination of lost confidence due to the European Referendum result (Brexit) and a significant change to the method in which landlords are taxed on buy-to-let properties which brings the UK housing market up-cycle to an end.
Housing market news is not reported quite as obsessively in Britain as it is in Australia - perhaps itself an indicator of a less frothy housing market ex-London - but an inspection of the latest rental market data from Your Move implies that rents are rising almost vertically since the new buy-to-let tax legislation became effective from April 5.
Note how rents initially fell in the first quarter of the year as landlords rushed to buy rental properties ahead of the deadline.
The rises in rents are by no means uniform but in certain parts of the country where demand for housing is highest and supply is critically short (i.e. in the surrounds of London and the green belt) rents have exploded.
Reported Your Move:
"Rent growth in the South East of England was significantly higher than anywhere else, with the typical property now commanding £924 per month. This is 14.9% higher than a year ago."
Source: Your Move
One can only imagine the outcry in Australia if equivalent news was reported, but in Britain only moderate coverage was to be found in the media.
With less incentive for landlords to invest and with housing supply still not meeting demand in aggregate, rents will likely continue to rise steeply in the south east.
Loan sizes rise
Back Down Under, the July Housing Finance figures showed that the average loan size has begun to sneak steadily higher again from $352,200 in February to $360,900 by July.
Following a very similar trend the average first homebuyer loan has increased from $323,600 in February to $335,600 in July.
In many ways the market in Australia seems to be following remarkably similar patterns to those that played out in Britain.
Whether or not Australia will see a second round of macroprudential tightening remains to be seen.
Looking at what new market entrants are up to at the state level, we can see that the average first homebuyer is borrowing $23,000 less in Western Australia than one year ago.
Elsewhere average loan sizes for first homebuyers are creeping up again. The chart below is smoothed on a 3mMA basis.
Tasmania saw almost no increase in average loan sizes for first homebuyers for half a decade, but this has now changed with the average loan size increasing by $25,000 or 11 per cent over the past year, the only state to see this metric above all previous peaks.
However, the Housing Finance release showed a weak result for new home finance, with the seasonally adjusted value of loans down 3.4 per cent in the month of July.
Although many new dwellings are bought by non-residents and therefore are not captured by these figures, this once again suggests that it's only a matter of time before the construction boom begins to wobble whatever the building approvals figures might say.