Australia's consumer confidence remains stuck in a slump, with brokers saying the mood is spilling over into the housing market.
The latest ANZ-Roy Morgan Australian Consumer Confidence report showed sentiment rose 2 percentage points in the week ending 13 September to 74.6 points. But the reading remains below the neutral level of 100 points and short of the 26-year average of 108.5 points.
ANZ Economist Sophia Angala said the "weak" numbers are likely a result of continued inflationary pressures, higher interest rates and ongoing global uncertainty.
On the ground, brokers say the drop in confidence is causing potential buyers to wait on the sidelines.
"There's lots of uncertainty," Amol Agrawal, founder and finance broker at Juice Finance, told Australian Broker. "People are still looking but not taking that next step of putting an offer in. Some buyers are now obviously backing off a little bit and saying, 'let's just see what this market does.' And they're waiting.
"And where there used to be 15 to 20 groups of people who would come to an open home, and someone from the East Coast would pretty much always buy on site, now I've been told by agents and clients that maybe two or three groups come through to the open home. And if there's an offer, it's just one," the broker added. "So yeah, things have changed."
Claire Viskovich, founder and director at Beez Neez Finance, also pointed to a broader slowdown in market activity.
"I think just all of Australia slowed down a bit," she said.
The Reserve Bank of Australia (RBA) has already raised the official cash rate three (OCR) times this year, bringing it to its current level of 4.35%. By August, markets, including three of Australia's Big Four banks, had begun pricing in further interest rate hikes sometime in 2026. By September, all four of the big lenders, as well as Macquarie, were on board, forecasting additional rate rises before year's end.
Comments direct from the central bank also reinforced expectations that rates could rise again if needed to bring inflation under control.
Deputy Governor Andrew Hauser said earlier this month that there's still "one big problem and that’s inflation. Inflation is too high, and that’s why we raised interest rates three times at the beginning of this year. And the question now, frankly, for us, is have we done enough, or is more needed?”
Hauser's comments came off the back of RBA Governor Michele Bullock's comments after the August meeting, when she said the bank would consider raising interest rates again, "if that is what is required to bring inflation down in a timely way."
The RBA has repeatedly stressed that its goal is to bring inflation back within the target band of 2% to 3%. The latest consumer price index (CPI) didn't do much to tame market fears. The July CPI showed that inflation, while easing slightly, remained above the band. In the 12 months leading up to July, headline CPI was up 3.5%, down from 3.8% in the lead up to June, while trimmed mean inflation was up 3.6%, unchanged from the year leading up to June.
Higher interest rates, mixed with higher costs of living, rising unemployment and uncertainty over the global outlook have no doubt raised concerns over borrowers' ability to pay back loans.
"And then of course the budget was also very challenging, because it has led to a high degree of uncertainty as to what the changes will mean, and particularly, and also a withdrawal of investor activity, which is also impacting particularly the cheaper end of the market," said Nerida Conisbee, Ray White's chief economist.
