Theresa Worrell: Consumer Confidence Nosedives – that’s not good for property

ANZ-Roy Morgan Australian Consumer Confidence nosedived to 109.5, a fall of 4.6% from the previous week’s reading.

That’s not good for our economy or for property.

When people feel feel confident they’re more likely to spend their money and when they’re not confident about their jobs and their financial future, they keeps their hands in their pockets.

All this suggests the RBA is going to need to “grease the wheels of industry” with an interest rate cut, sooner rather than later.

And with an election looming, it’s likely both major parties will promise us tax cuts. Maybe that will make us feel happier.

Key points:

All the sub-indices were in the negative, with three components falling more than 5%.
The decline has also resulted in the headline index and each sub-index closing below their long-run averages .
Current financial conditions fell by 2.9%, while future financial conditions took a bigger hit, falling 5.4%.
The economic conditions sub-indices were also in the negative, with current economic conditions falling a sharp 7.9% and future economic conditions declining by 5.4%.
The ‘time to buy a household item’ fell by 1.7% vis-à-vis a decline of 2.1% in the previous reading.

ANZ’s Head of Australian Economics, David Plank, commented:

“Confidence took a significant hit last week, falling well below average.
We think the soft GDP report and, perhaps more importantly, the focus on a “per capita recession” were the primary factors in the plunge.
The last such big decline in confidence was the weekend of the Wentworth by-election, something we thought was unlikely to have a lasting impact on sentiment.
This decline could be longer-lasting as it appears to be more related to underlying economic conditions.
If it proves to be a sustained decline then it is yet more bad news about a household sector that is already under pressure. No doubt the RBA will take note.”