Westpac-Melbourne Institute Consumer Sentiment Index Statement - Oliver Hume

Following today's release of the Westpac-Melbourne Institute Consumer Index, the following statement can be attributed to Oliver Hume Chief Economist, Matt Bell.

Consumer Confidence Surges to Seven-Year High Despite Inflation Concerns

A big move in Consumer Sentiment from the Westpac-Melbourne Institute overnight. Overall sentiment jumped 12.8% to hit net positive levels for the first time since early 2022 and the highest overall reading in seven years (outside COVID disruptions).

It was mainly due to an improvement in consumers’ assessment of the economic outlook for the next 12 months and next five years. This matches what we’ve been seeing in terms of a strengthening household sector in GDP figures, in Household spending indicators, and indeed in property market activity.

Land Sales and Land Prices Rise as Consumer Confidence Rebounds

Land sales and prices are up across most markets in the September quarter, reflecting the uptick in established market prices over the same period.

What is surprising is that this improvement in the economic outlook of consumers came at the same time as market concerns about inflation increased and the continued easing of interest rates became much less certain.

Consumers seem to have shrugged this off when it comes to property. Time to buy a dwelling index was largely unchanged, and consumers remain very positive about future property price growth.

In the middle of a housing shortage that has no short-term solution, consumers are still trying to get into the market before prices run away from them.