CANBERRA, AAP – The slide in the iron ore price is expected to have weighed on Australia’s trade position in October and will see a further narrowing from the record surplus posted in August.

The Australian Bureau of Statistics will release the trade balance for October on Thursday.

Economists expect the surplus will narrow to $10.8 billion in October from $12.2 billion in September and a record $14.7 billion in August.

In October, the iron ore price was around $US120 per tonne in October, down from $US210 per tonne in June and July. It has since dipped below $US100 per tonne.

Still, exports were one positive in Wednesday’s national accounts for the September quarter which showed an economic contraction of 1.9 per cent as a result of recent COVID-19 lockdowns.

Australia’s net trade position contributed one percentage point to growth, with exports fuelled by global demand for coal, LNG and meat products.

Imports of goods fell, reflecting continued global supply constraints and a fall in domestic demand.

The 1.9 per cent economic contraction was the third largest since the national accounts were introduced in 1959, but was smaller than economists had feared.

“We have not completely dodged a bullet, but we have avoided a rout,” KPMG chief economist Brendan Rynne said.

“The figures are nowhere near as bad as some had forecast, and reinforce the underlying strength and resilience of the Australian economy.”

The ABS will also release housing finance figures for October, which are expected to show a rise of two per cent, rebounding from the 1.4 per cent fall in September.

The data pre-empts the decision by the banking watchdog to tighten requirements for getting a home loan in an attempt to cool a heated housing market.

The Australian Prudential Regulation Authority told the banks from November it wanted them to assess new borrowers’ ability to meet their loan repayments at an interest rate at least three percentage points above the loan product rate.

This compares with the serviceability buffer of 2.5 percentage points that was previously used.

House prices continued to climb in November but at a much slower pace than earlier in the year as the market faces a number of constraints.

The CoreLogic home value index rose 1.3 per cent in November to an annual pace of 22.2 per cent.

However, the monthly pace of house price growth is less than half that seen at the peak in March, when prices rose by 2.8 per cent.

CoreLogic research director Tim Lawless said a number of factors are now working against the market – fixed mortgage rates are rising, higher listings are taking some urgency away from buyers, affordability has become a more substantial barrier to entry and credit is less available.