Home buying sentiment falls after record high: Westpac

The Westpac-Melbourne Institute Consumer Sentiment Index revealed that the ‘time to buy a dwelling’ index decreased by 3.2 per cent to 75.3 index points based on its latest survey of 1,200 adults conducted between 1 and 6 April.

The index has fallen off the back of a 15-month high in the ‘time to buy a dwelling’ index, which was reported at 77.8 index points in March.

The report stated that, despite the record, the index was still “deeply pessimistic”, compared to the average index across the full history of the report of 120.8 index points.

The ‘time to buy a dwelling’ index did, however, show year-on-year growth with an increase of 5.9 per cent from April 2023 when the index was 71.1.

The report noted that buyer sentiment in South Australia dropped most significantly out of all states, falling 14 per cent, followed by Queensland, which reduced by 10 per cent.

Melbourne’s buyer sentiment was the highest at 86.4 index points, a further increase from last month’s index that was 84.3 index points.

The ‘house price expectation’ index rose marginally by 0.1 per cent to 161.2 index points, with the report revealing that just under 70 per cent of consumers expect house prices to continue to rise this year.

Speaking on the Reserve Bank of Australia’s (RBA) next board meeting on 6–7 May, Matthew Hassan, senior economist at Westpac Group, expects the board to leave the official cash rate unchanged.

Hassan said, however, that this was dependent on inflation continuing to return to the RBA’s target consumer price index (CPI) range of 2–3 per cent.

The economist noted that the RBA’s board was becoming “a little more comfortable that further rate rises will not be required”. He noted, however, that the RBA was not confident enough to consider rate cuts, based on the central bank’s latest commentary.

Hassan said that the March quarter CPI update, which is set to be released on 24 April, “will be key to shaping the RBA’s views”.

Commenting on Westpac’s economic forecast, Hassan said: “We expect the update to show a clear drop in inflation into the 3–4 per cent range.

“That should give the Bank more confidence that it will achieve its target in 2025, allowing for a more positive message at its May Board meeting – something that would provide some comfort for Australia’s embattled consumers.”

[Related: Home buying sentiment at 15-month high: Westpac]