For the first time in five years the broad sentiment of Australians has moved from mildly negative – to mildly positive. The broad trend in predicted improving economic conditions, along with a return to wage growth and falling unemployment has driven a return to positive consumer sentiment across Australia.
CoreData’s survey – which focused on a representative sample of all Australians and was conducted in the first week of January – showed that 42.2% of Australian surveyed were optimistic for the year ahead while only 13.7% were pessimistic.
This is a shift for Australian consumer sentiment – essentially moving from mildly pessimistic about the economic future to mildly optimistic for the future.
Optimistic for the year ahead
In truth the data is still choppy – with some signs of wage growth emerging – not in particular the wage negotiations taking place for train drivers in New South Wales – which tends to be the harbinger of wage inflation – but also note house prices are cooling – home lending is falling and that share market expectations across the board are for weak returns.
Consumers are aware of this and only 20% of the Australians surveyed thought there was a chance of interest rate rises this year while 80% are predicting house price falls.
Mortgage Stress Is Real
The housing market in Australia, particularly east coast capitals, has pushed home-owners into large mortgages and it’s starting to hurt.
Already a third of those with mortgages that responded to the survey said they were experiencing either real or perceived pressure to pay their mortgages and half said they were making spending changes to meet their mortgage repayments, which all points to the fact that if there is any change in mortgage rates – the recent recovery in consumer confidence will be short lived.
Consumers want a Royal Commission … but are ambivalent about its outcomes
More than half of the consumers surveyed approved of the Royal Commission into financial services – but of those that approved of it, half of that group lack confidence in any change.
Many consumers believe the Royal Commission may act as a distraction from other key reforms throughout 2018; almost half of our respondents agreed that ‘the Royal Commission is a distraction to the real problems in Australia’. Clearly some consumers are wanting Government and regulators to tackle different, more significant problems afflicting their day-to-day.