If The Block auctions last week were a barometer for the capital city housing market, you’d be forgiven for thinking that the market is still in the throes of a huge leap higher.
Not so, according to Westpac’s detailed analysis of its Consumer Sentiment survey questions released in their monthly Red Book.
The worm has clearly turned for assessments of ‘time to buy a dwelling’. After a choppy second half to 2013, the sub-index has broken lower in 2014 with a further 3.9% decline in Apr. At 115.9, the index is off sharply from its Sep peak of 145 and well below its long run average of 123.4.
Westpac says that while a shift in sentiment is yet to show through, it is only a matter of time and year-on-year rates of growth will be lower by mid-year.
Activity measures such as housing finance approvals (to Feb) and total housing market turnover (to Jan) have been choppy in recent months but are showing tentative signs of ‘topping out’ after last year’s strong surge. Annual growth in market turnover is tracking particularly closely in line with the ‘time to buy a dwelling’ index with about a 3mth lag, suggesting the cooling off should become apparent in annual growth rates by mid-year.
Not bad news but a warning about chasing prices at the moment perhaps.
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