We're in the money: consumer confidence hits new highs
The March Westpac Melbourne Institute consumer sentiment survey recorded 110.5 on a scale where 100 means optimists merely balance pessimists.
It is the first time the index has breached 110 since December 2010.
On the all-important question of whether now is a good time to buy a house the confidence reading surged to a 3-year high of 144. An extraordinary 60 per cent of consumers surveyed believe that now is a good time to buy a dwelling. Only 16 per cent think it is not.
"Sentiment about house purchases usually leads building approvals by around 12 months," ANZ economic analyst Savita Singh said. "This points to a recovery in dwelling investment."
Otherwise lacklustre housing finance approval figures released on Wednesday show a rise in approvals for investors of 4.4 per cent in January, offsetting a dip of 2 per cent in December. Approvals for investors are up 19 per cent over the year.
An impressive 56 per cent of those surveyed thought now was a good time to buy a car, compared with 14 per cent who thought the time was bad.
"Consumers would have been buoyed by the positive run on markets," Westpac chief economist Bill Evans said. "The sharemarket rose a further 3 per cent between February and March to be up 10 per cent for the year and 20 per cent from its September low."
Asked whether the sharemarket was a wise place to hold savings, 8.6 per cent felt it was, up from 5.4 per cent a year earlier. Of real estate, 21 per cent said it was a wise place for savings, up from 19 per cent.
Those believing "paying down debt" was the best use for savings fell from 23 per cent to 18 per cent.
All but one of the questions asked by the Melbourne Institute drew clearly positive responses. The index for Australians expecting better family finances in the year ahead rose to 108 from 99 a year before. The index for Australians expecting a better economy in the year ahead was up from 89 to 110. The index for expecting better conditions over the next five years climbed from 93 to 107.
"These are strong results," Mr Evans said. "Despite the run of interest rate cuts to December 2012 the index averaged only a modest 98. What we are now seeing is the accumulation of those cuts genuinely boosting confidence."
The only index not above 100 referred to family finances over the past year. It rose from 76 to 87.
Frequently Asked Questions about this Article…
The March Westpac Melbourne Institute consumer sentiment survey recorded an index of 110.5 (where 100 is neutral), the first time it has breached 110 since December 2010. The report attributes the lift to six near-consecutive interest rate cuts and a rising sharemarket since December.
Yes — the survey's housing purchase confidence reading jumped to a three-year high of 144. Sixty percent of respondents said now is a good time to buy a dwelling, while only 16% said it was not.
ANZ economic analyst Savita Singh noted that sentiment about house purchases typically leads building approvals by about 12 months, which points to a likely recovery in dwelling investment. Recent housing finance figures also show investor approvals rose 4.4% in January and are up 19% over the year.
Westpac chief economist Bill Evans said consumers were buoyed by the positive run in markets. The sharemarket rose about 3% between February and March, was up roughly 10% for the year and about 20% from its September low, which helped lift overall confidence.
The survey showed more Australians consider property a wise place for savings: 21% said real estate was wise (up from 19% a year earlier). Only 8.6% said the sharemarket was a wise place to hold savings, although that is up from 5.4% a year earlier.
The survey found a strong appetite for car purchases: 56% of respondents thought now was a good time to buy a car, compared with 14% who believed it was a bad time.
Fewer respondents now view paying down debt as the best use of savings: that proportion fell from 23% to 18%, suggesting more consumers are leaning toward spending or investing as confidence rises.
Most forward-looking measures were positive: the index for Australians expecting better family finances in the year ahead rose to 108 from 99; the index for expecting a better economy in the year ahead climbed from 89 to 110; and expectations for conditions over the next five years rose from 93 to 107. The only index still below 100 referred to family finances over the past year, which improved from 76 to 87.
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