Consumer confidence remains high despite easing home prices

The latest survey of confidence among New Zealanders shows a slight weakening of sentiment this month but it is still elevated

Consumer confidence remains high despite easing home prices
The ANZ-Roy Morgan NZ Confidence Index is down more than 2 points to 125.4 in July but it is the second highest reading for 5 months and is above the long-run average of 119. The seasonally adjusted index is the highest since September 2014.

Compared to June, the share of respondents who think that house prices will go up in during the next two years was marginally higher (64% vs. 63%) but the expectation of that increase was down to 3.7% from 4% a month earlier.

Despite a cooling of house prices in Auckland (down 4% since the start of 2017) consumer confidence in the city remains elevated.

However outside Auckland, the research shows that there is only a four point difference between the most confident area (Canterbury) and the least confident (South Island excluding Canterbury), so the conclusion is that divergent house prices are having little impact on confidence.

Consumers’ confidence in their own financial situation is also slightly lower this month while the expectation for their financial position for 12 months’ time was little changed.

Generally New Zealanders are confident in the economy with the strong labour market and low unemployment rate along with signs of rising wages. Lower petrol prices and some of the measures for families from the budget are also playing their part.