ANZ-Roy Morgan Australian Consumer Confidence fell 2.0% to 113.3 this week, following a bounce of 5.1% in the previous week.
Westpac’s decision to increase its mortgage rates, combined with news flow around slowing momentum in the property market, is likely to have contributed to the fall in confidence.
- The decline in confidence was broad-based.
Of note, consumers’ views towards whether now is a ‘good time to buy a major household item’ fell 3.1%.
This sub-index is 7.9% below its long run average, and is furthest from the long run average in comparison to all other sub-indices.
- Views on ‘economic conditions in the next five years’ fell 1.2%, but appears to cementing an upward trend supported by confidence in the Turnbull government.
ANZ Co-Head of Australian Economics Felicity Emmett commented:
“The fall in ANZ-Roy Morgan Australian Consumer Confidence last week was likely driven by deteriorating sentiment about the outlook for the housing market.
Higher mortgage rates and falling auction clearance rates are pointing to weaker growth in house prices.
The latest ANZ-Property Council Survey revealed a decline in property sector confidence with falls expected in residential prices and construction.
A softer housing market is likely to weigh on consumer confidence, economic growth and employment.
“Housing has been a key pillar of growth this year, and without that support in 2016, we expect the economy will need further stimulus in the form of another 50bps of rate cuts from the RBA.
While the focus is turning to the November RBA board meeting, we continue to expect the Bank to wait until February to change policy settings.”
WHY I TRACK CONSUMER CONFIDENCE
Consumer confidence is an economic indicator measuring the degree of optimism consumers have about the state of the economy, as well as their own personal finances.
The level of confidence determines a person’s willingness to spend, borrow and save.
If confidence is high, people are going to be more willing to invest in property, buy a new home and generally just spend more money.
If confidence is low, people are more likely to sit back and “wait to see what happens” – causing a negative impact on the property market.
Source: Roy Morgan Research