More people are searching property in Australia using Google. In prior housing downturns, that's usually acted as a lead indicator for a turning point for prices.
While, from a historical perspective, that suggests prices may soon stabilise, auction clearance rates still remain at levels that coincided with falling values in the past.
ANZ Bank expects Australian home prices will fall 4% this year and 2% the next. It tips the declines in Sydney and Melbourne greater than the national average, forecasting a drop in prices of 10% from peak to trough.
More people are searching property in Australia using Google.
While that may simply reflect people stickybeaking about what's going on in their area — values are, after all, falling in a majority of capital cities and regional areas — whenever it's happened during housing downturns in the past, it's more often than not acted as signal for a turning point for prices.
This chart from ANZ Bank underlines that point, showing the bank's Housing Search Index — a measure of Google searches for house-buying related terms — overlaid against the annual change in Australian home prices.
Whether your a sceptic or not, where search terms move, prices usually tend to follow.
Along with a modest uptick in ANZ's separate Housing Credit Impulse — essentially a measure of the change of the change in annual housing credit growth in Australia — it suggests that while home prices are falling for the moment, the pace of declines may slow, or even stall, based on the track record of these lead indicators in the past.
However, while some homeowners will no doubt hope these measures are right, ANZ isn't ready to call an end to price declines just yet.
"An important consideration for us is that the trigger for the current downturn in the housing market is credit availability," says David Plank and Giulia Lavinia Specchia, members of ANZ's Australian economics team.
"In previous downturns the trigger was materially higher interest rates driven by policy tightening from the RBA.
Adding to the need for caution, Plank and Specchia haven't been overly convinced by the recent performance of auction clearance rates in Sydney and Melbourne, almost always the busiest markets in Australia in terms of auction activity.
"We would like to see a clear upturn in the auction clearance rate before we can confidently say the worst of the house price declines are behind us," they say.
Although derived off significantly lower market activity, clearance rates across the capital cities fell to fresh multi-year lows last weekend, led by a sub-45% result in Sydney that was weakest in a decade.
Even excluding that result which may have been influenced by holidays and the footy grand finals, clearance rates in Sydney and Melbourne have consistently sat around 50% for several months, a level that has coincided with price declines in the past.
ANZ is forecasting that national home prices will fall 4% this year and a further 2% in 2019 before stabilising. According to CoreLogic, prices nationwide have fallen 2.7% over the past 12 months in average weighted terms.
ANZ tips values in Sydney and Melbourne will fall more than the national average, forecasting prices will decline 10% from their previous cyclical peaks.