‘No longer affordable’: West Australians downbeat about buying a house as NAB tips next RBA move to be a cut

West Australians feel worst about buying a house compared to the rest of the country, a new survey has revealed, as the State’s property prices continue their stubborn climb. The consumer outlook is so gloomy that a Big Four bank is now also forecasting the Reserve Bank’s next move will be to cut interest rates, rather than lift them, despite out-of-control inflation. A closely followed survey by Westpac and the Melbourne Institute on Tuesday revealed homebuyer sentiment was extremely weak in WA. Compared with the majority of the country, where buyer sentiment sat between 80 to 86 points, WA was just at 59 points. “It is not surprising to see most WA consumers thinking that it’s not a great time to buy a dwelling,” AMP economist My Bui told The West Australian. “Prices have consistently reached new record highs and are no longer perceived as very affordable compared to other States.” The median house price in Perth is now over $1 million, the third highest behind Sydney and Brisbane. Over the past year, WA house prices surged 25.4 per cent, faster than any other city or States, and well ahead of the 8.8 per cent growth nationally. But Ms Bui notes that while people think it’s not a good time to buy a dwelling, price expectations remain stable, suggesting most people still expects prices to go up in the next 12 months. It comes the same day National Australia Bank scrapped its previous forecast for another rate hike in August. NAB chief economist Sally Auld and head of Australian economics Gareth Spence are tipping the central bank to leave rates on hold — at 4.35 per cent — at its meetings next week and in August. They then expect the central bank to start cutting rates in the second quarter of 2027, but the timing remains uncertain. According to the Westpac survey, Australian consumer sentiment slipped into “deeply pessimistic” territory in June and was now at some of the weakest levels seen in 50 years. “The survey detail shows cost-of-living issues remain front and centre, the temporary halving in fuel excise tax providing only a small and brief reprieve,” Westpac head of Australian macro-forecasting Matthew Hassan said. “Meanwhile, other concerns may be starting to emerge with a sharp drop in house price expectations suggesting some consumers are becoming more unsettled about the impact of recently announced tax changes.” Nationally, house price expectations fell 15 per cent in June, taking them to the lowest level since March 2023, when the housing market was last in a downturn and the RBA was still in the middle of its hiking cycle. “Housing-related sentiment continues to look very unsettled, reflecting a mix of price declines in some markets, actual and expected interest rate rises, and the major tax policy changes affecting investor housing announced in the Federal Budget,” Mr Hassan said. Last month’s Federal Budget unveiled reforms to curb tax breaks for property investors in order to boost housing affordability. The reforms, which include an overhaul to the capital gains tax, have proven unpopular and the Opposition had accused Prime Minister Anthony Albanese of breaking election promises. Adding to household’s financial pain was last month’s 0.25 percentage point rate hike that reversed the RBA’s three cuts last year. “Labor’s economic model is to hit businesses and consumers with higher taxes and inflation, so it is not surprising that confidence is so low,” shadow treasurer Tim Wilson said. “It won’t change until we have a government that has policies where hard work pays off again.” Asked whether that sense of gloominess was also being reflected in the political polling that had shown One Nation overtaking Labor and the Coalition, Mr Wilson said the major parties had to offer a positive vision. “Australians are living the consequences of the economy Labor built, Australians are desperate for a change of government and it is why we must offer an animating vision that empowers Australians and where hard work pays off,” he said. The RBA next meets on June 15-16. The board is widely expected to hold interest rates to assess the impact of the energy price shock and significant monetary tightening. “The negative impact on Australian consumers is becoming clear,” Mr Hassan said. But he said the RBA’s more pressing concerns were still likely to be around inflation, which continues to track above its 2 to 3 per cent target range and the full impact of higher energy costs still to come. “While there is room for the board to take a quick breather, we still expect further rate hikes in subsequent meetings,” Mr Hassan said. Last week, RBA deputy governor Andrew Hauser defended the institution’s approach to interest rates after it fully reversed cuts in 2025. He justified the cuts by pointing to economic conditions in 2025. NAB data out the same day on Tuesday revealed business confidence rebounded in May, while conditions remained weak. Ms Bui said both consumer and business sentiment readings showed rate hikes were working to slow down the economy.