Houses perhaps but certainly cars off the shopping list as consumer sentiment falls

Jonathan ChancellorDecember 8, 2020

The “time to buy a dwelling” sentiment dropped by 3.9% in the latest Westpac-Melbourne Institute Index of Consumer Sentiment.

But the level interest still sits as above the index lows of earlier this year. The index tracking views on whether it was time to buy a car fell by an even sharper 6.2% to register the lowest point since 2008.

The overall Westpac-Melbourne Institute Index of Consumer Sentiment fell by 3.5% in August from 92.8 in July to 89.6 in August.

“Coming after a fall of 8.3% in July, this latest fall is sending a significant message,” Westpac chief economist Bill Evans says.

The Index is now at its lowest level since May 2009 based on the survey conducted over the period August 1 to 6.

Some 76% of respondents had answered the survey before Friday, August 5, when confidence was jolted by turmoil in global financial markets with the reported 4.3% fall in the Dow Jones Index of US shares and the 4.2% fall in the Australian Index.

For the period before August 5 the Index was at 91.4 and for respondents in the period of August 5 to 6 the Index stood at 83.9.

“The index had fallen by 1.6% even before the financial turmoil,” Evans notes.

“As expected this financial turmoil has added another dimension of risk to consumers over and above those issues associated with interest rates, house prices, carbon tax, and potentially, jobs.”

The modest fall in sentiment is despite the Reserve Bank holding rates steady at its recent meeting and (until recently) a surging Australian dollar. It comes after an 8.3% fall from already low levels and clearly points to the consumer remaining cautious.

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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