Mortgage brokers in the Rockingham area are reacting to the latest news on consumer confidence with varying degrees of enthusiasm. At Smartline Rockingham, we are optimistic but cautious. Here are the statistics and what they could mean to you for the rest of the year.
The Rise in Consumer Confidence
Consumer confidence as measured by the Westpac/Melbourne Institute Index rose to 102.4% in May for a 6.4% increase compared to April. This is the largest increase in consumer confidence during May since 2007. The index is also up 10.1% from May of last year.
The index is set up so that it’s 100% neutral. Anything above it is optimistic and anything below is pessimistic. The demographic that saw the largest rise was the 25-44 age demographic, whose confidence rose 16.3% to 106.0%.
The part that is unfortunate for WA is that our confidence is down 7.7% from April. This was attributed to concerns about sinking GST revenues and and weak commodity prices.
What it Means to You
The Reserve Bank of Australia (RBA), as you probably know, has been lowering interest rates for two years to stimulate the economy. While consumer confidence has risen, it hasn’t resulted in the increased market activity that was intended by the lowered interest rates.
The ANZ-Roy Morgan consumer confidence survey, conducted weekly, rose from a six-month high in April to a sixteen-month high in May. The recently released Federal Budget is being credited by most economists and observers as the main driver for the increase in consumer confidence. Two million small businesses stand to benefit from the new budget, which is also seen as a driver.
The way we see it, the property market could be due for a rise in activity because the 25-44 age group represents the majority of homebuyers and potential homebuyers. Market activity, while great for the market, also means that prices will rise. If you are thinking about buying a home, it may be wise to move now before prices rise.
To learn more, call the mortgage brokers at Smartline Rockingham today: (08) 9527 1800.