Table of contents
featured image
By
A A A

Consumer sentiment falls, signs emerge that inflation and rates are impacting buying conditions and dwelling sentiment

I watch changes in consumer sentiment carefully because when consumers feel financially comfortable and wealthy they spend more and this helps the economy move on.

And when consumers feel less confident they put their hands in their pockets and don't make big financial decisions and in general spend less and in some ways this is a self-fulfilling prophecy and economic conditions get worse

Consumer sentiment fell 0.9% month on month in April to 95.8 from 96.6 according to the latest Westpac-Melbourne Institute survey.

It is now at the lowest level since September 2020 and following last month’s sharp -4.2% fall.

At that time concerns around interest rates and inflation were starting, compounded by Russia's invasion of Ukraine and the spike in petrol prices as well as the super weather events.
There were a number of positives this month including the Federal Budget, strengthening in our labour market and a significant fall in petrol prices.
However the April consumer confidence index is the lowest since September 2020 when Covid pandemic fears were dominating.

Australian Consumer Confidence

Inflation concerns have exploded

It seems concerned about inflation are rising for both consumers and businesses according to the National Australia Bank

Their ‘time to buy a major household item’ sub-index fell sharply by 5.3% with inflation concerns likely weighing on the minds of potential buyers.

Time To Buy A Major Household Item And Dwelling

Views on economic conditions though were more positive with the ‘economy, next 12 months’ up 5.8%, and the ‘economy, next 5 years’ up 1.0%, both seeing a partial rebound from falls in the March survey.

Consumer Sentiments Components Deviation From Average

This is starting to impact sentiment around buying conditions for durables

The NAB have suggested that today’s consumer sentiment is starting to impact plans around buying durables, though they say is unclear the extent to which households will pare back purchases when faced with higher prices.

Durables consumption in Australia is running around 24% above pre-pandemic levels and so some correction back towards pre-pandemic levels is likely at some point as consumers pivot towards services.

Australian Consumer Confidence And Unemeployment

There was a 3.5% fall in the ‘house price expectations’ series, while ‘time to buy a dwelling’ remained at its lowest levels since February 2008.

Time To Buy A Dwelling And House Price Expectations

Affordability constraints are likely starting to bite alongside the rise in fixed rates and house prices have started to moderate slightly in Sydney and Melbourne.

Fixed interest rates have been pushed up by all the banks and are now at their highest level since June 2019.

Australian Mortgage Rate

 

About is a Property Strategist with an accounting background and over 30 years’ Commercial Banking experience. She is a passionate property investor who enjoys helping her clients create wealth through property investment using Metropole’s strategic approach.
Welcome to Metropole Melbourne
No comments

Guides

Copyright © Michael Yardney’s Property Investment Update Important Information
Content Marketing by GridConcepts