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ISCOVER
Jessica Darnbrough
The Reserve Bank of Australia’s decision to cut the cash rate in May is finally starting to have a positive impact on consumers, with confidence on the rise once more.
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The Westpac-Melbourne Institute Index of Consumer Sentiment rose by 4.7 per cent in June, from 97.6 in May to 102.2.
Westpac senior economist Matthew Hassan said the index showed optimists now outnumber pessimists, though the margins remain slim.
Of particular note was the fact that many survey respondents believe now is a good time to buy.
According to Mr Hassan, separate indices tracking views on ‘time to buy a dwelling’ now sit 20 points above their respective long-term historical averages.
“Clearly consumers see this as an opportune time to make major purchases or enter the housing market, likely reflecting the low cost of finance and comparatively good affordability,” he said.
“However, concerns about the economic outlook are likely discouraging many buyers from going ahead with actual purchase decisions.
“There are also signs that households may be becoming less risk-averse, with a notable shift in their views on the ‘wisest place for savings’. In March, 41.3 per cent of respondents favoured bank deposits or other fixed interest investments, with a further 18 per cent nominating ‘pay down debt’. Those proportions declined to 40.7 per cent and 15.7 per cent respectively in June.
“The main swing has been towards a more favourable view on real estate, with 24.6 per cent nominating this as the ‘wisest place for savings’ (up from 21.3 per cent in March),” Mr Hassan said.
