- Westpac’s monthly consumer confidence survey showed optimists outnumbered pessimists for the 11th straight month.
- However, sentiment towards the housing market fell to the lowest level since May 2009, the first month the survey question was run.
Australian households are holding steady in the face of multiple headwinds putting a strain on budgets.
Westpac’s monthly gauge of consumer confidence rose by 1% in October to a reading of 101.5.
It partially offset two straight months of falls, following the political chaos in Canberra and a round of mortgage rate hikes by the big banks.
The index is based on a tally of positive and negative responses, and a reading of 100 indicates that optimists outnumber pessimists.
However, within the headline data, some interesting trends emerged in the latest reading.
Most notably, the Index of House Price Expectations fell by another 7.4% in October to 101.4 — the lowest level since the survey question was first run in May 2009.
“The state detail showed a particularly sharp 20.3% drop in Victoria, suggesting the price correction in Melbourne — which has been slower to come through than in Sydney — is starting to bite,” Westpac chief economist Bill Evans said.
House price expectations for NSW (87.1) and Victoria (88) are now well below the 100 level. Expectations remain most bullish in Tasmania (142.8) and Queensland (130.1).
In further evidence that sentiment towards housing remains low, the “time to buy a dwelling index” slipped by another 0.9% after a 4.8% fall in September, more than offsetting the 5.5% gain in August.
However, “despite the weakening, buyer sentiment is still well above the lows seen through mid-2017,” Evans said.
As it turns outs, that was just before prices in the Sydney market peaked in August 2017, before commencing a decline which remains ongoing.
The October result marked the 11th straight reading above 100, indicating that households remain resilient despite low wage growth and the ongoing housing market downturn. And Evans highlighted Australia’s strong labour market as a key contributor to that trend.
Although labour market expectations “softened a touch in October”, the employment index still consolidated its September gains after falling through the middle of the year.
“Most of this is coming from a more balanced performance across the major states, with a particularly dramatic turnaround in labour market expectations in Western Australia,” Evans said.
That turnaround most likely aligns with data in yesterday’s NAB business survey, which showed evidence of the ongoing resurgence in Australia’s mining sector.
This table shows the recent monthly changes for each of the major sub-indexes in the survey:
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