The Melbourne Institute and Westpac Bank released their Consumer Sentiment Index results this week.
The October Index results reported an increase of 3.3% over the month with the Index recorded at 117.0 points.
The result highlights that the Australian consumer is significantly more optimistic than pessimistic in the current economic climate.A subset of the consumer sentiment index is the Time to Buy a Dwelling Index which was recorded at 110.3 points for the months. This result is a little surprising, indicating that consumers remain optimistic that it is a good time to buy property despite the fact that property value growth is clearly slowing and there is a strong likelihood of further interest rate hikes.
The results would appear to be at odds with housing finance data which shows continuing weakness amongst commitments for finance.
Housing finance data released this week by the ABS shows that finance commitments continue to report weak results.
The data showed that total owner occupier finance commitments increased by 1.0% during August however, they remain -22.8% lower over the year.
Although total owner occupier commitments increased over the month, this was entirely as a result of the increase in the number of finance commitments for established dwellings (1.4%). Finance commitments for new construction (-1.0%) and the purchase of new dwellings (-2.0%) continued to ease over the month and are now -27.9% and -18.7% lower respectively over the year.
The total value of housing finance commitments to investors also fell to $6.5 billion during August, the third consecutive month in which the value has eased which suggests that investors are becoming less active in the current market as value growth continues to slow.
Finally, the number of first home buyer housing finance commitments fell by -2.5% for the month and is down by -49.3% for the year. First home buyer commitments have not been as low since January 2005.
Finance commitments are a leading indicator – the show waht’s ahead as homebuyers and invesotrs organise their fiannce a ffew months before the purchase their property. Few people getting finance and more proeprties on the makret mean we have moved for a sellers market into a buyers market.
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