Sounds contradictory but it’s not. Following last week’s NAB housing sentiment survey, Westpac is out with its own version (as a part of the Red Book). Price expectations have jumped for the nation:
And in every state:
Interesting to note that there’s little difference between states despite the very divergent markets.
The same cannot be said for the “Time to buy a dwelling” index, which has taken a hit nationally and is at the low end of its recent range:
But has wildly diverged at the state level:
NSW has erased its entire rate cut rally, QLD was hit, VIC hit a new high while WA is going sideways. Westpac reckons:
While the level may be comforting, the monthly fall is a little alarming. We have seen declines of this order in the past but these have typically been when interest rates were high, rising or speculated to be about to rise, or when the housing market was a lot shakier. The current fall though follows reports of strong gains in house prices, particularly in Sydney prompting some commentators to warn of the potential for a price bubble.
― The pull-back this month suggests that buyer sentiment is very sensitive to the affordability impact of rising prices. That in turn suggests the current market upturn may be more fragile than it looks.
― The state detail adds weight to this interpretation. NSW, which has seen stronger reads on ‘time to buy a dwelling’ for most of 2013, recorded a particularly sharply fall (–22.5%). That follows much clearer signs of strength in the Sydney market (auction clearance rates hit record highs in Sep). Elsewhere, the index was down 11% for Qld, but up 9.5% over the 2mths in Vic and flat in WA.
Call it affordability if you like but it’s not really surprising is it? Exactly the same happened in 2009. The index clearly functions as a contrary indicator for behaviour and price rises. Under the hysteria, I guess we all know the truth, which is why the September bubble debate will also have impacted sentiment.
If we take this literally then NSW prices are powering, VIC prices are deteriorating, WA prices are steady and QLD prices might get off the canvass.
Full Red Book here.
