Affordability Concerns Ease As Sentiments On Home Buying Improves

Affordability Concerns Ease As Sentiments On Home Buying Improves

By: Nfinity Financials0 comments

News Synopsis

Tentative Improvements in Homebuyer Sentiment, with Affordability Concerns Easing Slightly.

The “time to buy a dwelling” statistic appears to have somewhat increased, according to a recent Westpac-Melbourne Institute survey, which is good news for the housing market. Overall, though, consumers continue to have a cautious mindset. Similar results were reported by Nfinity Financial Group in their most recent housing market update, pointing to a wider pattern of cautious optimism among prospective buyers.

According to the May Westpac-Melbourne Institute Consumer Sentiment indicator, the “time to buy a dwelling” indicator increased by 1.6% to 76.5 basis points.

According to the Westpac index, it is still much below the “neutral” level of 100 and far below the historical average of 121, but this rise has saved “about half” of the 3.2% decline in April. This indicates a 0.2% rise over the same time in the previous year (May 2023).

Buyer attitude is still “deeply pessimistic” despite the uptick, and pricing expectations are still holding at extremely high levels. The Westpac Melbourne Institute Index of House Price Expectations, which is higher than the long-term average of 126.5, was a constant month over month at a little over 161 basis points. Furthermore, rather than making inflation and rate increase worries worse, the newly revealed federal budget appears to have lessened them, according to the Mortgage Rate Expectations Index.

Over the following 12 months, the index measures expectations for mortgages with variable rates. The index rose 8.3% to 133 bps for the May survey from 122.8 bps for the April survey.

“However, most of that move occurred before the budget, with those surveyed before showing a combined index read of 136.5, while those surveyed after had a combined index read of 128.5,” stated Matthew Hassan, senior economist at Westpac Group. This suggests that the higher-than-expected inflation result for the March quarter and the RBA Governor’s more “vigilant” speech about battling inflation after the Board meeting in early May were the main causes of the increased anxieties about rate rises.

Consumers were somewhat more optimistic about the prospects for the economy and family finances in May, according to the component breakdown; however, this was entirely offset by a decline in present evaluations of buyer sentiment and family finances.

According to the May study, the poor consumer climate has “been no let-up. Consumers are more likely to utilise cash from fiscal measures to mend their finances than to embark on a spending binge.  The Reserve Bank of Australia’s (RBA) attempts to bring inflation back to goal given the weak starting position and very cautious mentality. Westpac anticipates that the RBA will maintain the current cash rate at its forthcoming meeting on June 17–18.

Key Points

  • Compared to April, sentiment on purchasing a property is a little more optimistic.
  • Concerns about affordability appear to be lessening.
  • Expectations for home prices are still high, and buyer attitudes are generally negative.
  • Anxieties about inflation and rate increases seem to have subsided in the wake of the federal budget.

Key Concerns

  • Buyer sentiment is much lower than historical and neutral norms.
  • Expectations for house prices are far greater than the historical norm.

For more detailed information read Our Articles or schedule a Discovery Call with Nfinity Financials At 1300 GET LOAN.

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