Subject: What would make house prices fall? Prices only fall when the system tightens

⚡️ Highlights:

1. Australian dwelling values only fall when borrowing power contracts significantly and for a prolonged period of time, undermining demand.
2. Factors such as rising interest rates, tightening serviceability buffers, and constraints on loan-to-income ratios are key in causing housing values to fall.
3. Scarce credit, not just expensive credit, is necessary for prices to fall as it removes buyers from the market.
4. Incomes need to stop offsetting rate pain for prices to fall, implying weaker wage growth, fewer hours worked, or rising unemployment.
5. Housing supply decreases when prices fall, limiting the extent of price declines and ultimately placing a floor under dwelling values.

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