Consumer sentiment on 'time to buy a dwelling' falls in September, even as prices keep dropping

Prices have been falling in most capital cities for months, yet Australians are feeling less confident about buying a home, not more. The Westpac-Melbourne Institute Consumer Sentiment Index dropped 5.2% to 84.4 in September, reversing most of the gain made the month before. Buried inside that survey is a number that matters directly to first home buyers: the "time to buy a dwelling" sub-index fell from 95.7 to 85.5, meaning fewer people think now is a good time to purchase, even with prices lower than they were earlier this year.

What the survey actually found

The overall sentiment index is still around 12% below where it sat a year ago, with pessimists outnumbering optimists by a wide margin. According to Westpac's head of Australian macro-forecasting, fuel prices and interest rate concerns were the main drags on the result. Assessments of family finances compared with a year ago fell, and expectations for family finances over the next 12 months also softened.

Unemployment expectations climbed as well, rising from 135.7 to 139.4 on the survey's index (a higher reading means more people expect unemployment to rise). Put together, households are feeling squeezed from multiple directions at once: fuel costs, job security, and the cost of a mortgage.

Why falling prices have not lifted buyer confidence

On paper, falling dwelling values should make housing feel more within reach. In practice, this survey shows the opposite happening for many households. The Mortgage Rate Expectations Index rose from 158.8 to 170.4, and the share of consumers who expect mortgage rates to rise over the next year climbed from 59% to 64%.

• Rate fear can outweigh price relief: if buyers expect their repayments to get more expensive, a lower purchase price does not necessarily feel like an advantage.
• Job security concerns dampen confidence: rising unemployment expectations make people more cautious about taking on a large, long-term commitment like a mortgage, regardless of where prices sit.
• Sentiment is a lagging, emotional read: it captures how people feel about the housing market broadly, not how affordable a specific property is for a specific buyer with a specific deposit and income.

What this means for first home buyers

A national mood indicator is not a personal recommendation, and a falling "time to buy" reading does not mean buying is a bad idea for every household. It may simply mean fewer people are confident enough to act, which can translate into less competition at open homes and auctions for buyers who are financially prepared.

• Treat sentiment data as context, not a signal. Your own borrowing capacity, deposit, and job stability matter far more than the national mood when deciding whether a purchase makes sense for you.
• If more people expect rates to rise, it may be worth building a buffer into your budget now rather than assuming today's repayment estimate is the ceiling.
• Lower buyer confidence can sometimes mean less competitive conditions for buyers who are ready to move, so it may be worth getting your finances in order (pre-approval, deposit, and a clear budget) ahead of time rather than waiting for sentiment to turn positive again.
• A lender will assess your application on your own numbers, not on how the country feels about the market this month, so it is worth working through your own scenario rather than relying on headlines alone.

Run the numbers

Rather than relying on how confident the country feels, it may be worth checking where your own numbers land:

• Am I Ready to Buy? - work through your own readiness rather than going on national sentiment alone
• Borrowing Power Calculator - see what you could borrow today, and how a rate rise could change that
• Interest Rate Shock Tester - check what your repayments could look like if more of the expected rate rises land
• Rent vs Buy Calculator - compare your specific renting and buying scenario instead of guessing based on the general mood