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Consumer confidence could benefit property market

20 Jun 14

There are various factors that affect the performance of the property market and. one element that is tied closely to it is consumer confidence.

Findings from the ANZ-Roy Morgan Research Consumer Confidence for the week ending June 15 show people are starting to be more optimistic about what the future has in store.

They have in many respects overcome the difficulties faced in the federal budget released last month and are starting to realise there may be good times ahead.

Confidence rose 1 per cent compared to the previous week to reach a reading of 103.2. A modest rise of 4 per cent has now been witnessed over the past three weeks.

ANZ believes the household consumption outlook remains strong for the rest of 2014, although there might still be some blips as the effects of budget measures start to filter through.

This could slow down the rate of the recovery and affect spending in the short term, but there are nevertheless hopes that this will be overcome towards the end of the year.

Cameron Kusher, RP Data research analyst, recently commented on how closely consumer confidence is linked to property market activity.

He explained how prices are now likely to continue to rise, albeit at a slower pace than has been seen in the past, which may be a scenario those who've undertaken real estate courses have already witnessed.

Mr Kusher continued: "This is largely due to affordability constraints becoming more prevalent in the market and both lower returns and capital growth potential for the investors that have been so active in the market.

"Adding to this is consumer sentiment, which has been trending lower since September last year."

The low interest rate environment is likely to facilitate further increases in prices, but how consumers will react to this trend is yet to be seen.