Mixed signals from WA homebuyers

More Western Australians think it is a good time to buy property than in any other state in Australia, but sandgropers remain increasingly pessimistic regarding the prospects of capital growth, according to new research.

The Westpac-Melbourne Institute’s time to buy a dwelling index fell by 1.3 per cent in September, after rising 21.1 per cent in August.

But it remains above the national level, which fell 8.2 per cent in September, to be 23.2 per cent under its peak level from September last year.

“Interestingly, both NSW and Victoria, which are experiencing strong market activity, are recording responses not seen since the GFC lows,” Real Estate Institute of WA head of research Stewart Darby said.

“Despite this very bullish outlook by WA respondents, turnover in WA has been trending down since March 2013, around the same time that WA’s consumer sentiment peaked, which has also been on a similar downward trend prior to the recent rebound.”

Mr Darby said the time to buy a dwelling index had tracked higher than consumer sentiment over the past five years.

But he said WA respondents were significantly more bearish than other states when it came to the prospects of an increase in home values.

“The response may be underpinning some hesitancy to transact in WA, with buyers concerned about falling values, which of course has an alternate upside for prospective buyers through cheaper entry or upgrading,” he said.

“In terms of buyer groups, these are in lock step with a recent rebound in responses after a solid fall in the mid-year.

“A growth in house price expectations by first home buyers reflects their pessimistic view around time to buy as they may perceive rising prices may put the market beyond their reach.”