Confidence was given a bit of a stir last week in the face of mixed messages from two major reporting houses.
One the one hand, the Westpac/Melbourne Institute reported a drop in its ‘good time to buy a dwelling’ index.
The monthly survey of 1,200 respondents shows that in July, there was a drop of around 8 per cent in the number of consumers who think it is a good time to buy a dwelling.
But what was obscured throughout much of the reporting is that despite the drop, the time to buy a dwelling index remains at elevated levels overall.
Fact 1 – sentiment about the property market has been rising steadily and showing gradual improvement since the end of 2011 when the RBA began cutting the cash rate.
Fact 2 – analysis of the current survey results confirms that roughly 93 per cent of people surveyed think that this is a good time to buy.
That’s a heck of a lot more encouraging than the reported sharp falls – and it’s a lot less confusing for those who follow the market.
What the survey did reveal was that consumers in general are not as confident as those looking to buy property.
And what fell noticeably (by 6 per cent) was confidence in family finances.
[sam id=36 codes=’true’]The Westpac/Melbourne Institute measure of consumer confidence across the states was highest in New South Wales and Western Australia; followed by Victoria and South Australia.
All of these states scored just over 100, which means that the number of optimists outweighs the number of pessimists. But Queensland scored quite low at 89.
The second report came in from the NAB Residential Property Survey of 300 property participants, which recorded weaker expectations about house price growth.
Their quarterly survey, which includes a high proportion of property owners, developers and real estate agents, recorded a drop in sentiment that almost wiped out the gains of the previous quarter.
If their barometer is correct, prices over the next three years will rise in Sydney by 12 per cent; Brisbane 10 per cent; Perth 15 per cent; and Melbourne 4 per cent.
Overall for the capital cities, NAB think prices will rise by just 9 per cent over the next three years.
These results are different in some ways to those reported recently by economic forecaster BIS Shrapnel. In fact, both sets of forecasts really fly in the face of improved affordability and lower interest rates.
BIS think that Sydney’s average values will lift by 19 per cent; Brisbane’s by 17 per cent & Perth’s by 15 per cent. Melbourne’s prices are expected to rise by just 5 per cent over that three year period.
From our perspective, we fall in the BIS camp. Things may remain quiet for the time being, but property fundamentals remain strong. And once the confidence circuit breaks, the rush for residential property should begin.
For mine, part of that circuit breaker will occur with the federal election.
How about an announcement, Mr. Rudd?
Oops, I forgot….we only like to inform the Australian public when we cut ourselves shaving. Keep thinking big – that’s the way.
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