The Westpac-Melbourne Institute Index for July 2021 has revealed that the “time to buy a dwelling” index increased from 96.1 in June 2021 to 96.9 in July 2021.
This has reversed recent trends where the index had declined for five consecutive months and had shown significant signs of stress and was in pessimistic territory for the first time since April 2020.
Despite the slight monthly uptick, the index has remained significantly lower (26.5 per cent) from its peak in November, reflecting concerns about the impact of steep house price rises on affordability, particularly among prospective first home buyers (FHB) and owner-occupiers.
The index has recorded a 13.5 per cent yearly decline.
In his analysis, Westpac chief economist Bill Evans particularly noted that the index for Sydney only inched 1 per cent lower in July, which he said could suggest a degree of disconnect between “general concerns about the economic outlook and the effect of lockdowns, and attitudes towards the housing market”.
This disconnect is further evident in the Westpac Melbourne Institute of House Price Expectations, which increased by 0.3 per cent to a “very bullish” 158.3 reading nationally.
Reopening “euphoria” drove house price expectations up 4.4 per cent in Victoria in July to 163, with the state’s index now 6.7 per cent above NSW (where house price expectations rose by 0.4 per cent to 152.8).
Property prices have continued to escalate, with the CoreLogic Daily Home Value Index recently showing that year to date across the combined five capitals (excluding Darwin and Hobart), home values have increased by 13.5 per cent, while they have surged by 14.3 per cent over the last 12 months.
The data showed a weekly rise of 0.3 per cent and a monthly rise of 1.5 per cent in home values.
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.