Australians' sentiments toward the housing market were a mixed-bag over the past month — while fewer were expected to break into the market, there was a slight increase in their price-growth outlook, according to the latest Westpac-Melbourne Institute Index of Consumer Sentiment.
According to the study, the "time to buy a dwelling" index reversed the gain it recorded in the preceding month, falling by 5.6%.
"The monthly pull-back was broadly-based, suggesting it may reflect some shift in expectations around interest rates," said Westpac senior economist Matthew Hassan.
In fact, fewer consumers were expecting more rate cuts this year. According to the study, only 16% of Australians believe there are further rate cuts ahead.
This is in contrast to some predictions by market watchers that point to two more rounds of rate cuts this year, which would bring the cash rate to another historic-low of 0.25%.
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Hassan said while the Reserve Bank of Australia (RBA) is expected to hold the cash rate next month, an easing bias remains with the sluggish forecast for the economy.
"As such, we see a combination of weak economic growth and deteriorating labour market conditions drawing a further policy response from the bank," Hassan said. "Currently we have April pencilled in for the next cut but the governor may need more time to be convinced."
On the other hand, the “house price expectations” index witnessed a 0.2% improvement over the month. Price expectations continued to improve in New South Wales and Victoria. However, Australians in Queensland and Western Australia were not as optimistic.
Overall, the Westpac-Melbourne Institute Index of Consumer Sentiment showed a modest improvement in the month, hitting 95.5 index points. However, this is still below the long-run average of 101.4 index points.
"The lift in sentiment this month likely reflects easing concerns around bushfires and comes despite some significant negative developments, most notably the coronavirus outbreak abroad," Hassan said.
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