Australia Westpac-MI Consumer Sentiment Up But House Price Expectations More Imp For RBA

By Sophia Rodrigues

Consumer sentiment rose 2.3% to 95.5 in February, more than rebounding from the 1.8% fall in January, the Westpac-Melbourne Institute Consumer Sentiment Survey showed. Housing related sentiment was mixed with buyer sentiment deteriorating but house price expectations up a tad more after strong gains in January. The ‘time to buy a dwelling’ index fell 5.6% in February, to be back near recent lows. The monthly pull-back was broadly based suggesting it may reflect some shift in expectations around interest rates.  House Price Expectations Index edged 0.2% higher in February, consolidating after a spectacular 70% surge over the previous nine months. Consumer price expectations continued to lift in NSW (+4.5%) and Vic (+1.7%) but cooled in Queensland (–3.7%) and partially retraced last month’s very sharp gain in WA (–12.9%). Strong rise in housing prices in response to the three rate cuts last year is one of the reasons the RBA has a very weak dovish bias because it is also accompanied by strong increase in owner-occupier mortgages. The data on house price expectations will thus do little to shift the RBA's thinking at this point.