Consumer confidence hits lowest monthly average since 1990

Consumer confidence in Australia experienced a decline of 1.1 points in May, following a spike in confidence prior to the unexpected interest rate hike by the central bank.

According to the latest data from the ANZ-Roy Morgan Consumer Confidence Index, confidence in “current economic conditions” decreased by 2 points, while confidence in “future economic conditions” fell by 0.6 points, following a 2.7-point loss the previous week.

This decline in confidence came after a 2.3-point increase in early May, highlighting the volatility of consumer sentiment.

ANZ senior economist Adelaide Timbrell noted that confidence in current financial conditions reached its second-weakest point since the beginning of 2020, with the weakest point occurring earlier in May 2023.

“Those paying off their homes still have far lower average confidence than renters and outright owners, despite housing prices lifting since mid-February,” Ms Timbrell said.

The average consumer confidence for May 2023 was the weakest calendar-month average since December 1990, reflecting the ongoing impact of cost-of-living pressures on households.

As economic conditions weaken, there is increasing anticipation that the central bank may maintain the cash rate at its next monetary policy decision meeting on 6 June.

In addition, the decline in consumer confidence coincides with the ANZ CoreLogic Housing Affordability Report, which highlighted the unfavourable conditions for investments, as mortgage costs increased significantly compared to rents.

The weekly consumer confidence result marked the fifth worst since January 2020 and represented the 13th consecutive week below 80.

Among the mainland states, confidence only rose in NSW, while it fell in Victoria, Queensland, South Australia, and Western Australia.

Aussies seek ‘dream life’ over ‘dream house’

In parallel with declining consumer confidence, a new report from Insignia Financial revealed that home ownership has taken a back seat as financial independence becomes the nation’s most common aspiration.

The report, titled the Financial Freedom Report, surveyed 2,000 Australians and found that achieving financial independence was the top aspiration for 55 per cent of respondents.

This was followed by taking regular holidays (50 per cent) and maintaining a good work/life balance (45 per cent). However, home ownership, while still a consideration for 45 per cent of respondents, did not make it into the top three priorities.

Australians are increasingly inclined to pursue their dream life (60 per cent) over owning their dream home (40 per cent).

In addition, building a trusted group of family and friends rounded out the top five aspirations, with 44 per cent of respondents prioritising it.

[Related: Concrete evidence of rate hike impact: Economists]

Kate Aubrey is the senior content producer of Momentum Media's mortgages titles: The Adviser and Mortgage Business.

Prior to joining Momentum Media, Kate covered regional and breaking news for ABC Radio for more than three years.

She has a Master of Arts in Journalism from the University of Melbourne and a Bachelor of International Business and Business Management from Griffith University.

Email Kate at: This email address is being protected from spambots. You need JavaScript enabled to view it.