The Westpac-Melbourne Institute consumer sentiment index shows sentiment among buyers rebounded in May, rising by 32% and reversing most of April’s 27% drop. Reassuringly, the Index is now only 8% below its average level for the period September–February before governments imposed any restrictions. The rebound was across all states, led by Western Australia which is up by 68%.

Consumer expectations for house prices rose 5% – a dramatic turnaround from the large drop of 50% in April. Victoria bucked the modest rebound with consumers expecting a price drop of 12%. “It is extremely noteworthy that in the midst of this exuberant rebound in confidence, prospects for house prices have hardly budged,” says Westpac’s chief economist Bill Evans. “The Melbourne housing market looks vulnerable to the sudden slowdown in foreign student and migrant inflows and has already seen some early price slippage. The situation clearly bears watching closely.”The rising positive sentiment is a reflection of eased social distancing measures, supported by government stimulus measures.