AFTER a minor setback between April and July, the Westpac-Melbourne Institute Consumer House Price Expectations Index posted a solid rise in October from 46.9 to 60.4. This marks a new high for the upturn that began in October 2011 but is still 20 points below the highs in early 2010.
Just over 70 per cent of consumers expect prices to rise over the next 12 months, up decisively on the 59 per cent and 62 per cent recorded in July and April respectively.
Just under 20 per cent now expect prices to hold steady. The remaining 10 per cent of consumers giving an opinion expect prices to decline, the lowest share since July 2010.
‘‘The last few months have seen a significant shift in Australia’s housing markets with a surge in auction activity and signs of a quickening in price growth,’’ said Westpac analyst Matthew Hassan.
‘‘Over the full year to September, dwelling prices nationally are up about 5 per cent, with some measures suggesting gains have been at a double-digit annual pace over the last three months.
‘‘Despite widespread media coverage of this recent strengthening, few consumers expect prices to rise at a double-digit pace over the next year (11 per cent nationally versus 21-24 per cent in early 2010). Expectations may have been tempered by warnings of a potential price bubble although the same warnings were issued back in 2010.’’
He said a feature of the latest pick-up has been the uneven performance across states. Whereas dwelling prices are up 8 per cent year in Sydney and Perth, gains have been more subdued in Melbourne (+5.6 per cent year) and Brisbane (1.1 per cent year).
The state split of consumers’ house price expectations has reflected this divergence over the last year but now suggests it may be narrowing. Whereas NSW and WA consumers had been more bullish, expectations in October are more tightly clustered: the net percentage expecting price gains ranging from 68 (Vitoriac, NSW) to 58 (WA) with Queensland lower at 47. The question was specifically about house prices ‘‘in your state’’.
There are some additional nuances in the state detail around expectations for strong 10 percent-plus price gains.
This shows a higher concentration of price ‘‘bulls’’ in NSW (14 per cent) and Queensland (18 per cent), although for the latter this is balanced against a notably higher proportion expecting price declines (15 per cent vs 10 peer cent nationally).
‘‘Our analysis does point to a more varied price performance across different parts of the Queensland market.
‘‘Another notable detail is the sharp rise in the proportion of renters expecting double digit price gains with over one in four now picking strong gains. That may explain the weaker reads on ‘time to buy a dwelling’ across this sub-group,’’ Mr Hassan said.