Lower Consumer Confidence to Affect Property Market

Recent data on consumer sentiment from Westpac and the Melbourne Institute shows a slight decline in consumer confidence, which may in turn have a negative impact on the property market.

Consumer confidence has fallen for four consecutive months, falling below the 100 mark to 99.5. While this is a fairly neutral result, it is more than 10 index points lower than the 110.6 for September 2013.

As the index can fluctuate from month to month, it is usually more useful to identify the general trend. In this respect the index has dropped for five of the past six months.

Consumer confidence is closely linked to the housing market, as household finances can directly impact their decision to buy property. When consumers are more optimistic, they are more likely to decide to buy.

However, as Property Observer explained, the Consumer Sentiment survey found that more than one in four surveyed believed that the housing market was a ‘wise’ place for investing savings. As such, consumer confidence may not have impacted the housing market yet – but it could if trends continue.