Australia’s housing market is getting rattled. By Wolf Richter.

Lindsay David, of LF Economics in Sydney … put some findings of his boots-on-the-ground analysis into a note to clients. …

According to CoreLogic (the official data), home prices in Sydney fell 4.6% in June compared to a year ago, with house prices down 6.2%, and prices of condos down 0.7%. In the most expensive quartile, prices fell 7.3%.

But Lindsay David writes: “It is our view based on all the resources made available that house prices in the Sydney area have broadly fallen somewhere between 11% and 15% over the comparison period.” …

Under scrutiny, banks are now curtailing … some of their riskiest lending, such as interest-only mortgages to investors who cannot afford them, and this has caused lending conditions to tighten particularly for speculative buyers.

The changes “appear to have hit the mortgage market over the head with a baseball bat,” David writes. “In our opinion, this is the primary reason the Sydney property bubble got pricked.” …

David writes:

‘House Prices will fall, but not crash’ is the chorus despite Sydney house prices falling through the floor on the back of rising funding costs and weakening credit conditions. No doubt, revenues from real-estate and bank advertising remain a critical revenue component for Australian MSM news sites, relative to their international peers.

Humorously, the MSM has also begun to turn their attention on smaller housing markets that are showing signs of strength and increased credit expansion, such as Hobart, Tasmania, which has a population of just 220,000. …

We stand with the view the Sydney housing bubble appears to have been pricked