Now is not a good time to buy a Sydney or Melbourne home: Westpac confidence index

Consumer attitudes towards the housing market took a tumble in the latest Westpac Melbourne Institute Index of Consumer Sentiment.

The index tracking assessments of ‘whether now is a good time to buy a dwelling' fell by 6% to its lowest level since November 2010, when the Reserve Bank had been lifting interest rates.

It is now 25% off its highs of September last year.

Westpac chief economist Bill Evans says it was unlikely to be solely a response driven by the recent federal budget.

"Respondents have been lowering their confidence levels for some months.

"Between September last year and April the Index had already fallen by 20%.

The confidence around housing is particularly fragile in the major states with the index being down by around 30% from September’s highs in both NSW and Victoria.

"Concerns over high prices and limited affordability are likely to be the key reasons behind these trend," the report said.

The overall Westpac Australian consumer sentiment fell sharply in May, posting its lowest level since August 2011 following the government's budget.

The survey of 1,200 people showed the pessimists exceed optimists.