There’s widespread anticipation among consumers that prices will rise and house prices wont slow, new data shows.
Julys ANZ Roy Morgan consumer confidence survey was well above pre-Covid levels, with confidence changing little from the previous month, easing one point to 113.
A net 24 per cent of those polled also believed it was a good time to buy a major household item, up 2 percentage points.
“This is the single best retail indicator in the survey,” ANZ chief economist Sharon Zollner said.
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“This likely reflects wealth effects from the housing boom for those lucky enough to own a house, as well as excellent job security in an exceptionally tight labour market.”
People may also have felt it was wise to get in ahead of anticipated price rises. Respondents expected that in a couple of years, prices would be rising at an “extremely high” 4.9 per cent a year, instead of the typical 3.5 per cent.
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Because householders expected inflation, it would make it easier for retailers to raise prices without fear of a customer backlash and might also dampen wage demands in the tight labour market, Zollner said.
More than three quarters of respondents expected house prices to keep increasing. In a couple of years, they expected house prices to be rising at a rate of 6.4 per cent a year, up from 5.8 per cent previously.
“Higher mortgage rates are set to provide a stiffer test, but its fair to say that the notion that the housing market is unstoppable seems to be fairly well ingrained, Zollner said.
As far as their own financial situation was concerned, the number of people who felt their finances had improved in the last year was only 8 per cent higher than those who felt worse off.
But a net 23 per cent of those interviewed expected to be better off this time next year, up 1 percentage point.
Positivity about the broader economy was also lower, down 5 percentage points to negative 2 per cent.
The five-year outlook improved 2 percentage points to a net 12 per cent.
Consumers think now’s a good time to buy a big ticket item as inflation looms.
