Australian households seemed to continue to have less appetite for homebuying over the past month.
Both the CommBank Household Spending Intentions (HSI) Index and the Westpac Melbourne Institute Consumer Sentiment Index showed a weak reading for homebuying among those surveyed in October.
Homebuying intentions hit largest annual decline in the current cycle
CommBank’s HSI index for homebuying declined further in October, down 3.1%. This took the annual change to 27.3%, the largest decline in the cycle.
CommBank chief economist Stephen Halmarick said this further dampening of homebuying intentions was due to the aggressive monetary policy by the Reserve Bank of Australia (RBA) over the past six months.
“Given the lags involved in monetary policy, we should expect to see further weakness in home buying in coming months,” he said.
The dampened sentiment is also reflected on dwelling prices — CoreLogic data showed that median dwelling prices were down 1.1% across the eight capital cities.
From the peak in April, prices are now 6.5% lower.
“Prices are expected to be down 15% peak-to-trough in this cycle – based on a peak in the cash rate of 3.1%. If the RBA was to tighten monetary policy beyond this, dwelling prices could be expected to fall further,” Mr Halmarick said.
Westpac’s time-to-buy index recovers, but still at pessimistic levels
Buyer attitudes remain near historical lows according to the Westpac Melbourne Institute Consumer Sentiment Index.
Westpac chief economist Bill Evans said while the time-to-buy index edged up 2.4%, it remains in a deeply pessimistic territory at 77.1
“This Index has been stuck in the 75-80 range since March this year, 40-45% below the most recent peak in November 2020,” he said.
Along with this is the slump in house price expectations, with the index falling 8% to 91.1, which is a new cyclical low.
“The RBA’s interest rate decision had a significant negative impact on housing-related sentiment. Responses on house price expectations deteriorated sharply, falling by 13.6%, after the decision was announced,” Mr Evans said.
—
Photo by Nathan Cowley from Pexels.
Collections: Mortgage News
Share