ANZ economists are expecting the housing market to flatten into Christmas, rather than go higher, as credit growth remains anaemic.

Part of the reason for recent house price rises had been a lack of listings, with support from low interest rates and net migration inflows. There was also no doubt cashed-up buyers were still in the market, ANZ’s weekly Market Focus said today.

“But we also suspect the altered credit backdrop and weak labour market led to hesitancy to list and the lack of supply was consistent with an economy that was de-leveraging.”

A reported large rise in listings in September suggested the supply side was now responding.

“It would be tempting to surmise that rising supply will suppress prices, but it may also be a sign of confidence in the market, ie recent housing market trends are leading to increased confidence from homeowners to test the waters,” Market Focus said.

If it was a “confidence game” then credit growth would pick up.

Conversely, the authors said that if, as they suspected, income growth, rebuilding precautionary savings and job savings were more influential, then they expected credit growth to remain anaemic and the housing market to “flatten into Christmas as opposed to kick-on”.

Private sector credit grew by a meagre 0.1 per cent in August with housing up 0.3 per cent, while weekly Reserve Bank mortgage approvals data suggested no real acceleration into September.

“Our inclination remains that the need to deleverage and the balance sheet constraint continues to be dominant influences on the housing market, despite the odd pocket of strength,” Market Focus said.

The value of weekly housing loan approvals data collected by the Reserve Bank showed year-on-year growth of more than 20 per cent.

That implied a strong pick-up in household credit growth, but apart from a large spike higher in March, the value of housing loan approvals had been remarkably stable.

It was still running above last year’s level but was not showing signs of acceleration, Market Focus said.