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PHOTO: New home loans have fallen by 10 per cent compared to a year ago. AAP: Lukas Coch

Home prices are set to continue to weaken further as the demand for new mortgages dries up.

The number of new home loans fell by a larger-than-expected 2.1 per cent in August, to be down more than 10 per cent over the year.

Key points:

  • Number of new home loans -10pc over the year to the lowest level since 2010
  • Investor lending -20 per cent over the year
  • Falling housing credit is a leading indicator of falling house prices

The number of new home loans fell by a larger-than-expected 2.1 per cent in August, to be down more than 10 per cent over the year.

READ MORE VIA ABC