House price growth expectations falling, but remains above the average: Westpac

House price growth expectations falling, but remains above the average: Westpac
House price growth expectations falling, but remains above the average: Westpac

The Westpac Melbourne Institute Consumer House Price Expectations Index fell 1.1 percent in April but at 151.4 remains well above the long run average of 126, according to Westpac’s latest Red Book report.

Adjusting for seasonality, expectations look to have eased slightly since January Westpac says.

“While recent moves by regulators and in interest rates may have contributed to the April move, the cooling in price expectations is modest at best.

That is not surprising – while the intent may be clear, regulatory changes are less ‘visible’ for consumers than RBA rate moves and their ultimate impact more difficult to assess,” the report stated.

Price expectations may only respond once markets have shifted Westpac says.

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“It is worth noting what happened during the previous round of regulatory tightening, announced in December 2014 and deployed in 2015.

The main impact on auctions and finance activity came in 2015 H2 with price growth stalling flat late in the year and in early 2016.

Consumers’ price expectations started to fall from mid-2015, the index sliding 29% by December,” the report commented.

Also notable is the quick revival following the RBA’s rate cuts in May and August 2016 Westpac says.

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“The main takeaways from the sub-group detail are: 1) no correlation with wider sentiment shifts; and 2) most holding in NSW and Victoria but rising in Queensland and Western Australia (now clearly positive),” the report stated.

Tags: 
Housing Affordability Westpac

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