House price expectations surge

Consumer sentiment took a hefty knock this month, following on from yet another interest rate hike to a cash rate target of 3.85 per cent.

Consumer sentiment in regional Australia in particular is knocking around record lows.

House price expectations, on the other hand, have absolutely rocketed back from their lows of Q4 2022.

The Federal Budget figures implied population growth in Australia of around 2¼ million over the next five years, and it's increasingly clear what Aussies think is coming.

That is a new boom cycle for housing prices, due to chronic housing shortages in the capital cities.

The house price expectations figure rose another +11 per cent this month and is now even +19 per cent higher than it was a year earlier.

Source: Westpac

Why does this survey matter, you may ask?

Mainly because the house price expectations index has an almost perfect track record of correlating with dwelling prices.

Dr Alex Joiner of IFM extrapolates the figures below:

Lending is much too tight at the moment for new home sales to pick up much, with another miserable month reported by the Housing Industry Association.

There was some respite for the rental market last month, with the preliminary ABS figures for arrivals and departures suggesting that there were around 60,000 more departures than arrivals last month as more Aussies dusted off their underused passports for the colder winter months.

That's a temporary reprieve, though, and rapid population growth will resume over the coming months.

Meanwhile, Australia is sucking in an increasingly large share of the migrant millionaire wealth from Russia, India, and China, as the world's super-wealthy seek stability, lifestyle, and confidence.

The house price expectations figures will be buoyed further by some large sale prices reported this week in Homebush, Kellyville, and Rouse Hill, in Sydney, for example, as well as South Yarra in Melbourne, and Ascot in Brisbane.

About Pete Wargent Pete is a Chartered Accountant, Chartered Secretary and has a Financial Planning Diploma. Using a long term approach to building businesses, investing in equities, & owning a portfolio he achieved financial independence at the age of 33. Visit his blog