Consumers think now is the time to buy a house and expect house prices to rise, a new report shows.
The Westpac sentiment survey reports a “spectacular” rise in expectations of house price increases and a general improvement in sentiment from real estate consumers.
“Housing-related sentiment showed a clear response to the lowering in interest rates, although some of the gains were more muted than seen in past rate cuts,” says Westpac senior economist Matthew Hassan.
The time to buy a dwelling index showed a 1.8% rise to 116.9 points, while the house price expectations index recorded a “spectacular” 22.7% rise. “This is the highest level since August 2018,” Hassan says.
Award-wining buyers’ agent Rich Harvey of propertybuyer says sentiment has turned around significantly thanks to the election outcome, the APRA announcement and interest rate reductions.
“There’s certainly more positivity in the market,” Harvey says. “We are getting more inquiry and buyers are starting to re-activate their investment plans. The flipside is that the expectations of vendors have turned up as well.”
The RBA reduced the official interest rate to a historic low of 1.25% on 4 June. This, combined with a Coalition election victory and an easing of lending standards, has lifted market sentiment.
Domain economist Trent Wiltshire says the results are the early signs of a market turnaround.
“The combination of the house price expectations index and the time to buy a dwelling index suggest consumers think prices are at or close to the bottom,” he says.
Harvey says the improvement in sentiment is welcome, but he does not expect it to create a major revival in prices. “Until we start to see the effects of the interest rate cuts and APRA loosening some of the lending restrictions, I don’t think there will be a dramatic rebound,” he says.