Consumer confidence has shot to its highest level since 2010, according to the Westpac-Melbourne Institute Index of Consumer Sentiment.Westpac chief economist Bill Evans said the results show that interest rate cuts have finally begun to influence consumers.“It is the highest print for the index since December 2010. If sustained, it indicates that the Reserve Bank’s series of rate cuts which began in November 2011 are finally gaining strong traction with households,” Mr Evans said.
Consumers are feeling particularly confident with the property market, with respondents to the question “Is [now a] good time to buy a dwelling?” jumping 6.5 per cent to the highest level since August 2009.At the same time, the proportion of responses favouring real estate as a good place to invest savings rose from 24.6 per cent to 27.5 per cent, up 7.7 points since September last year.
The index also indicates that the improvement in confidence is dominated by rising optimism about prospects for the economy rather than how households feel about their own finances.Despite the survey being conducted between September 2 and September 8, Mr Evans is convinced the election played a pivotal role in the result.“It was really only the last day of the survey that covered the actual election result … [but] responses collected on the last day of the survey showed a further marked lift in sentiment, although the sample size is too small for this to be a statistically valid result," he said.
“I think it is reasonable to conclude that the election result played an important, if not leading, role in this strong boost to consumer sentiment.”