The Westpac-Melbourne Institute consumer confidence index was released last week and continued to show a massive disconnect between Australians’ perceptions about house prices and their buying habits.
The time to buy a dwelling index remained stuck near record low levels, whereas expectations around house price appreciation are still sitting at bullish levels, consistent with further growth in home values.
Rising prices combined with the highest mortgage rates in more than a decade has sent housing affordability and capacity to pay crashing:
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Still, Australians feel compelled to leverage into the market because rental inflation continues to run hot and they fear that prices will continue to rise, locking them out of the market forever.
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Underpinning this extreme sense of FOMO [Fear of Missing Out] is the fact that an unprecedented one million net overseas migrants landed in Australia over the past two calendar years at the same time as the rate of dwelling construction has collapsed:
The number of homes listed for sale has also fallen sharply, running 17.3% below the five-year average according to CoreLogic:
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Source: CoreLogic
As a result, Australia’s housing market now resembles the “hunger games”, with demand running way ahead of supply.
This imbalance between demand and supply is expected to persist, meaning that the rental crisis will roll on, compelling Australians to do everything they can to leverage into the market.
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The Albanese government has created the housing hunger games, and with it, unprecedented levels of FOMO and ‘panic buying’.