Consumer sentiment drops 2.1% in October but remains elevated: Westpac

The Westpac-Melbourne Institute of Consumer Sentiment fell by 2.1% in October but remains 9.2% higher than it was a year ago at 108.3.

The analysis suggests low interest rates, a strong Australian dollar and some lingering positivity from the September election outcome are keeping confidence buoyant.

Although confidence is at an elevated level, concerns remain around household finances.

The analysis says rising property prices are a double-edge sword, depending on what side of the fence you’re sitting on, a buyer or a seller.

Rising property prices reduces affordability for prospective home buyers and therefore dampens sentiment with the largest decrease in sentiment observed in the income group between $60,000 and $80,000.

Economic conditions over the next five years was the greatest component to decrease in October, falling by 7.3%, followed by family finances in the next 12 months index at -5.5% and economic conditions over the next 12 months index fell -2%.

The Westpac?Melbourne Institute Unemployment Expectations Index rose by a small 0.6% in October following a fall of 6.6% in September.