Australians say it’s a good time to buy a house despite thinking prices will fall further: Westpac

Australians think it is the best time to buy a house since March 2015, led by NSW residents who seem increasingly keen to take advantage of falling prices, according to Westpac economists.

The bank’s monthly consumer sentiment survey posted an 11.8 per cent surge in respondents thinking it is the right time to buy a dwelling — that is nearly 17 per cent higher than a year ago.Consumers in New South Wales showed the biggest turnaround, with the state’s ‘time to buy a dwelling’ index surging 26 per cent to a five-year high.

However, the NSW surge comes off a low base, with Mr Evans noting that the “stunning improvement” only restores the index to just below its long-term average.It follows the continued sharp slide in national house prices, which have now fallen 3.5 per cent over the past 12 months — the largest annual decline in six-and-a-half years.

Consumers surveyed by Westpac are anticipating further falls, with expectations of house prices declining by 2.3 per cent, to equal the weakest level on the survey’s record.

Consumers not planning to spend big this Christmas

Westpac’s survey also showed an improvement in the general confidence of consumers, with its sentiment index rising 2.8 per cent in November.

Westpac’s chief economist Bill Evans said it was a “surprisingly strong” result in light of the house price declines.

“In particular, respondents are much more positive about their own finances,” he said.

“That is despite consistent reports around weakness in the housing markets in the major capitals and the sharp falls in the equity market through October.”

However, the more upbeat assessment of household finances looks unlikely to translate into increased spending, with a measure of whether it is time to buy a major household item falling to an 18-month low.

Christmas spending expectations are also subdued, with a third of survey respondents expecting to spend less on gifts than they did last year and 56 per cent expecting to spend about the same.

“Despite the higher reads in overall confidence [this] suggests that we are unlikely to see any improvement over last year’s lacklustre Xmas spend,” said Mr Evans.