Westpac’s monthly consumer confidence index rose 1.9% in February, from 107.0 in January to 109.1 in February.
Despite the increase, the “Time to Buy a Home” index fell 3.1% and is now 8.6% below its November 2020 high.
“The decline in recent months suggests that recent property price hikes may already weigh on buying sentiment,” said Evans.
“This ‘affordability factor’ can be seen in the breakdown of the age groups, with buyer sentiment in the 18- to 24-year-old age group being much weaker than in other age groups.
“Consistent with this evidence of perceived ‘pressure’ on affordability is the Westpac-Melbourne Institute’s 6.5% increase in House Price Expectations Index.
“The index is now at a seven-year high and 2% above pre-pandemic levels.”
The index of house price expectations, which shows a rapid turnaround in the Victorian economy, rose 13.7% in February, almost twice as high as in New South Wales (NSW).
It’s the first month since March last year that the Victoria Index is above the NSW Index.
The rise in consumer confidence in February means roughly half of the loss in January, when the index fell from its decade high in December, has recovered and is now 14.2% above pre-COVID levels in February.
Mr Evans said the data showed that consumers were still extremely confident, which was vital to the economy at the time.
“The federal government should let the JobKeeper program expire at the end of March,” said Evans.
“It is important that households that have built up a very large financial buffer from the pandemic (recently estimated by the reserve bank at $ 200 billion, or 15% of pre-pandemic pre-pandemic pre-pandemic income), are ready to use that buffer now to use partial compensation for the economic impact of withdrawal from support programs.
“There is no doubt that the local pandemic management has had a constructive effect on trust.”
Victorian consumers have been the most confident in the country after successfully managing the pandemic, while outbreaks in Queensland and Western Australia have lost confidence.
Confidence among young people (18-24 years old) decreased slightly during the month, while older age groups saw an increase of up to 21%.
“Some of this underperformance in the younger age group could reflect a less enthusiastic response to vaccine developments,” Evans said.
He added to the survey that younger people could potentially have a more difficult time financially. with youth unemployment of 13.9% compared to the official unemployment rate of 6.6%.
“Limited job opportunities, weak wage growth and concerns about the affordability impact of a renewed hike in house prices may have weighed disproportionately on younger Australians over the past year,” Evans said.
However, the survey’s unemployment expectations fell 3.8%, the lowest since May 2011, meaning fewer respondents expect the unemployment rate to rise.
Photo by DJ Paine on Unsplash