New government lifts consumer sentiment

New government lifts consumer sentiment

Posted on Thursday, September 12 2013 at 11:20 AM

A new government combined with low interest rates, rising asset prices and the Aussie dollar appreciating again has skyrocketed consumer sentiment.

The Westpac-Melbourne Institute of Consumer
increased by 4.7 per cent in September, which took the
index to 110.6, its highest reading for almost three years.

A level above 100 means the
number of optimists outweighs the number of pessimists. Sentiment is now 12.7
per cent higher than it was a year ago.

The key driver, according to
the survey, was the election outcome.

“Consumers like certainty and
the election outcome eliminates the uncertainty around who will govern the
country,” a Commonwealth Bank statement says.

The cash rate is also at a
record low, which means low mortgage repayments and the ability to repay debt
quicker or obtain cheaper new debt which, in turn, is encouraging more
investors back to the market.

“Asset prices and in
particular house prices have been trending higher over recent months. This is
welcomed by homeowners. Rising house prices improve confidence by strengthening
household balance sheets through a lift in net worth.”

Sentiment was up the most in
Victoria (13.1 per cent) but in a sign of good things to come for Queensland
and South Australia, both states recorded improved sentiment. It was up by 7.4
per cent in the sunshine state and 6.3 per cent in SA.

On the other hand, consumer sentiment was lower over the month in New
South Wales (down 2.9 per cent) and Western Australia (down 0.8 per cent).

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