Time to buy a dwelling index lifts in August: Westpac–Melbourne Institute Consumer Sentiment Index

The Westpac–Melbourne Institute Consumer Sentiment Index rose 2 percent from 99.1 in July to 101.0 in August with the 'time to buy a dwelling index rising 10.1 percent.

 

The time to buy a dwelling index, according to the release, is now 9.7 points below long-run average but has improved 'markedly' over the year, according to Westpac.

 

 

 

It said the new record low on interest rates may also have been unnerving in terms of the signal it gives about the wider economy.

 

"While sentiment across the mortgage belt responded strongly (up 7 percent) it dipped 0.4 percent across all other groups on a combined basis," the report noted.

 

 

"The survey detail points to another positive rate effect from the decision by banks to raise some term deposit rates following the RBA rate move.

 

"August saw a notable 7 percent lift in sentiment amongst retirees, a group that typically reacts negatively to rate cuts (–0.4 percent historically) due to their low debt exposure and reliance on interest income.

 

 

"A range of factors likely contributed to the smaller positive reaction in August including the decision by the four major banks to reduce mortgage rates by 10-14bps vs 25bps in May. Against this, the survey detail suggests the decision by banks to raise some term deposit rates lifted sentiment amongst retirees, a segment that typically reacts negatively to interest rate cuts.

 

 

"The ‘time to buy a dwelling’ index surged 10.1 percent in Aug. It is 9.7pts below its long run average but has improved markedly over the year. Buyer sentiment in NSW and Vic have shown particularly strong improvements.

 

"The Westpac-Melbourne Institute Consumer House Price Expectations Index was flat in Aug. However, the signal since the start of the year has been of improved confidence with the index up 28 percent since the end of 2015."