Australians are increasingly optimistic about a housing market upswing, with Westpac’s House Price Expectations Index reaching a 15-year high in October. The index surged 12.2% over the past year and now sits 34% above its long-run average, indicating a strong belief that property prices will rise in the coming year.
At a reading of 172, the sentiment index is higher than during the pandemic boom — when ultra-low interest rates drove a 16% price increase in just 12 months. By comparison, the pandemic-era peak in April 2021 was 164.
What’s Driving the Optimism
Key drivers behind the bullish outlook include:
- Expectations of lower interest rates — although a November rate cut is uncertain, the trend is anticipated.
- Housing supply shortages and worsening affordability.
- Government incentives, such as the expanded 5% deposit scheme for first home buyers.
According to AMP economist My Bui, consumer expectations of house prices are a strong predictor of future growth, reinforcing momentum.
State-by-state, Queenslanders were the most optimistic, while Victorians were the least.
Confidence Rises, But Buyers Still Hesitate
Despite strong price expectations, Westpac’s “time to buy” index — which gauges if consumers think it’s a good time to purchase — remains subdued.
While the index rose nearly 24% over the past year, the majority of Australians still believe now is not a good time to buy, largely due to ongoing affordability concerns.
Rates Still “A Little Bit Restrictive”
Interest rates, currently at 3.6% after three cuts this year, remain higher than pre-pandemic levels. RBA Governor Michele Bullock acknowledged that rates are still “a little bit restrictive.”
Experts suggest that expectations of future rate cuts are already influencing market behaviour, with E61 Institute’s Nick Garvin noting that buyer sentiment is now shaped more by future outlook than current conditions.
