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Confidence in the housing market has boomed: Westpac

Australians are showing a renewed level of confidence in the housing market, with expectations around house prices and the “time to buy a dwelling” index rising in the face of an ongoing pandemic, and despite the recession.

The Westpac-Melbourne Institute Index of Consumer Sentiment surged by 11.9 per cent to 105 points in October, from 98 points in September.

“This is an extraordinary result,” Westpac chief economist Bill Evans said.

“Such a development must be attributable to the response to the October Federal Budget; ongoing success across the nation in containing the COVID-19 outbreak; and the expectation that the Reserve Bank Board is likely to further cut interest rates at its next meeting on November 3,” Mr Evans noted.

The ‘time to buy a dwelling’ index increased 10.6 per cent to its highest
level since September 2019.

The key measure of house price expectations has also risen
strongly, by 31.5 per cent to 117.3 from 89.2.

“Confidence in the housing market has boomed,” Mr Evans stated.

“The (time to buy a dwelling) result for NSW (now 120.4) was outstanding, with an 11.3 per cent rise compared to 7 per cent in Victoria (now 118.0) and 4.4 per cent in Queensland (now 118.6).

“The levels of the index in each of these eastern states are comparable, indicating a high degree of expectation that the Victorian market is set to reopen.

“The two states that have traditionally lagged the eastern states in the housing market but which are now dealing most successfully with the virus are standouts with respect to confidence around housing: WA (now 138) is up 29 per cent and SA (now 131.1) has lifted by 10 per cent.”

The National Index sits only 17 per cent below its pre-pandemic level, at levels seen in July, 2019.

“There is clear optimism in smaller states – where housing has underperformed the major eastern states for several years – although the apparent resilience of the Victorian market is impressive,” Mr Evans concluded.

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