Australian home loans rose at their slowest monthly pace in more than four years in January, with the annual rate the weakest on record, as credit tightening by banks and a sharp fall in housing prices turn off demand.
Data from the Reserve Bank of Australia on Thursday showed housing credit rose 0.2 per cent in January from the previous month - the slowest increase since October 2015 - while the annual pace clocked at 4.4 per cent.
Separate data from property consultant CoreLogic showed vendors were offering large discounts on their original asking prices in a bid to sell their property, with Sydney recording more substantial reductions than during the 2008 global financial crisis.
The figures bolster views that a sharp downturn in Australia's once-booming housing market has still further to run in a major headwind for consumer spending and economic growth.
The slowdown has also become a "significant uncertainty" for Australia's central bank which cut forecasts for economic growth and inflation earlier this month while opening the door for further policy easing.
"With housing market conditions continuing to deteriorate, buyers thin on the ground and a high volume of stock listed for sale, it is reasonable to expect that over the coming months vendor discounting may increase further," said CoreLogic analyst Cameron Kusher.
That suggests prices will drop further even though auction activity in February bounced across the country.
The median vendor discount in Sydney is currently at 7.5 per cent from 4.8 per cent a year ago and the largest since February 2006.
In Melbourne, vendor discounting at 7.0 per cent is the biggest on record, CoreLogic data showed.
"This highlights just how weak housing market conditions are and how few buyers there are," Kusher said.
Home prices had broadly doubled in the major markets of Sydney and Melbourne in the five years to late-2017 and have since fallen more than 8 per cent.
