Household house price inflation expectations appear to have peaked, but do not appear to be meaningfully retreating in light of recent policy changes.
Households continue to be much warier about buying a major household item than exceptionally strong house price inflation expectations would suggest they ‘should’ be, reflecting uncertainty about the economic outlook. Their self-reported wariness about spending would normally be a reliable indicator that retailers are doing it tough, but people have in fact been spending anyway. This likely reflects substitution for lost overseas holidays, the housing boom and interest-free deals – not to mention that massive fiscal stimulus deferred much of the income hit from COVID to another day. But one way or another the gap needs to close.
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