Thursday, March 14, 2013

Bugger the election. We're feeling good and we want to spend

Six near-consecutive interest rate cuts and a share market that’s been climbing since December have broken the back of consumer gloom propelling confidence to heights not seen for years.

The March Westpac Melbourne Institute consumer sentiment survey recorded a reading of 110.5 on a scale where 100 means optimists merely balance pessimists.

It’s 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 three and a half year high of 144. A 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 twelve months,” said ANZ economic analyst Savita Singh. “This points to a recovery in dwelling investment.”

Otherwise lacklustre housing finance approval figures released Wednesday show a jump 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.

Australians are also unusually keen to buy cars. An impressive 56 per cent of those surveyed thought that now was a good time to buy a car, compared to only 14 per cent who thought the timing was bad.

“Consumers would have been buoyed by the positive run on markets,” said Westpac chief economist Bill Evans. “The share market rose a further three per cent between the February and March to be up 10 per cent for the year and 20 per cent from its September low.”

Asked directly about whether the share market was a wise place to hold savings 8.6 per cent felt it was, up from 5.4 per cent a year earlier. Asked about real estate, 21 per cent said it was a wise place for savings, up from 19 per cent...

The proportion believing “paying down debt” was the best use for savings slumped from 23 to 18 per cent.

All but one of the questions asked by the Melbourne Institute recorded clearly positive responses. The index for Australians expecting better family finances in the year ahead climbed to 108 from 99 a year earlier. The index for Australians expecting a better economy in the year ahead climbed from 89 to 110. The index for Australians expecting better conditions over the next five years climbed from 93 to 107.

“These are strong results,” said Mr Evans. “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 refereed to family finances over the past year. It climbed from 76 to 87.

In today's Sydney Morning Herald and Age

Related Posts

. February. Now even Coalition voters feel good

. June 2012. It's the carbon tax wot done it - we're gloomy no matter what

. August 2011. Consumer confidence by voting intention