Australia: House price expectations shifting - Westpac

According to Matthew Hassan, Senior Economist at Westpac, most Australian consumers still see more price rises in the year ahead but with some notable shifts in NSW and WA.

Key Quotes

“Consumer expectations for house prices have softened slightly in recent months. The Westpac Melbourne Institute Consumer House Price Expectations Index has fallen about 2.5% between July and Oct, allowing for seasonal fluctuations. At just over 140, the index still shows price expectations in firmly positive territory, well comfortably above its long run avg of 127.”

“Of those with a view, nearly 60% expect prices to rise over the next year, 26% expect no change and 15% expect price falls – a net proportion expecting prices to rise of 43%. Our analysis suggests Oct is a slight seasonal low for expectations (markets tend to cool heading into year end as sellers look to transact before the off season and buyers dry up).”

“The state breakdown shows a sharper pull back in price expectations in NSW, where the market slowdown has been more pronounced. The shift in expectations suggests the moderation will carry into year end and early 2017. In contrast, price expectations have continue to rally strongly in WA. Despite ongoing price slippage in the Perth market, consumer price expectations have swung from clear pessimism to what now looks to be reasonably robust optimism. While the state market clearly still faces significant headwinds – not least of all a large overhang of vacant dwellings – the sentiment preconditions for a recovery look to be coming into place.”