A measure of Australian consumer sentiment bounced from near record lows in December as borrowers sensed a painful cycle of interest rate rises was nearing an end, lifting the outlook for house prices.
The Westpac-Melbourne Institute index of consumer sentiment released on Tuesday rose 3.0% in December, recovering some of November’s steep 6.9% slide. The index reading of 80.3 still means pessimists greatly outnumber optimists.
“In the case of interest rates, there are even some signs that the news is becoming viewed as slightly less negative – consistent with the notion that the bulk of the interest rate tightening cycle is now behind us,” said Westpac chief economist Bill Evans.
The Reserve Bank of Australia (RBA) raised rates a quarter point to a decade-high of 3.10% early in December, having hiked every month since May when they were at a record low of 0.1%.
For respondents with a mortgage confidence jumped 11.3% compared to a 3.8% rise for renters and a 2.7% drop for those who own their homes outright.
Westpac’s index on the outlook for house prices also showed a sharp gain of 27.6% in December, though a majority still thought it was a bad time to buy.
Measures of family finances compared with a year ago dipped 0.9%, but the outlook for finances over the next 12 months bounced 6.9%. The index of the economic outlook for the next 12 months slipped 0.4%, wile the outlook for the next five years climbed 5.2%.
Westpac’s measure of whether it was a good time to buy a major household item rose 3.0%, but was still down almost 21% on a year ago.
A separate survey from ANZ showed a small rise last week, the first time confidence had improved in the wake of a rate hike. Bank measures of electronic card spending have also pointed to resilience, with online sales seemingly drawing heavy demand in November.