Consumer sentiment slips as deep pessimism continues
- Westpac–Melbourne Institute Consumer Sentiment Index down 2.9% to 80.6
- Consumers report more pressure on finances and fearful about the year ahead.
- Near term concern about economy eases but medium-term outlook falls to 3yr low.
- Unemployment expectations steady at moderately elevated levels.
- Home purchase sentiment less bleak but price expectations off sharply.
The Westpac–Melbourne Institute Consumer Sentiment Index declined 2.9% to 80.6 in June from 83 in May.”
“Australian consumers remain deeply pessimistic. The sentiment shock that hit back in April eased off a touch in May but has intensified again in June. At 80.6, the latest monthly Index read is back amongst the weakest seen in the fifty-year history of the survey, pessimists outnumbering optimists by nearly 20%. The survey detail shows cost-of-living issues remain front and centre, the temporary halving in fuel excise tax providing only a small and brief reprieve. Meanwhile, other concerns may be starting to emerge with a sharp drop in house price expectations suggesting some consumers are becoming more unsettled about the impact of recently announced tax changes.”
“The component detail shows big falls in assessments of family finances but more mixed moves around the economic outlook and attitudes towards major purchases… Cost-of-living issues came back with a vengeance in June. The ‘family finances vs a year ago’ and ‘family finances, next 12 months’ sub-indexes both dropped sharply, down 7.5% to 67.3 and 8.5% to 85.1 respectively, giving up almost all of their May gains to be back near April lows.”
“The forward view speaks to particularly acute fears. Australians are more typically moderately positive about prospects for their finances, with an average index read historically of 106.5. There have been barely a handful of sub-85 reads on this sub-index over the last fifty years, one of which was back in April. Australian consumers are clearly bracing for more bad news on the financial front.”
“Notably, the downgraded outlook for family finances came despite a marginal easing in rate rises fears. The Westpac–Melbourne Institute Mortgage Rate Expectations Index, which tracks consumer expectations for variable mortgage rates over the next 12 months, fell 4.8% to 172.6. Just over two thirds of consumers expect mortgage rates to increase further over the next 12 months, an outright majority but smaller than the 74% of respondents surveyed last month.”
“Responses to additional questions on news recall highlight the main consumer themes... Responses in June showed particularly high recall for news on ‘Budget and taxation’ and ‘inflation’. While most assessed the news as unfavourable, there was a stronger consensus on ‘inflation’ news which 85% of consumers read as negative, compared to ‘Budget and taxation’ which closer to 70% viewed as unfavourable. This contrasts with ‘international news’, which 90% of consumers assessed as unfavourable, albeit with this news not cutting through in the same way – only 23% of consumers recalled news on this topic compared to 50-60% for news on the two major topics.”
“The Westpac–Melbourne Institute Unemployment Expectations Index was largely unchanged, recording a slight 0.1% dip to 139.8 in May. The Index is still sitting above the long-run average of 129, suggesting consumers remain on edge about job prospects.”
“Housing-related sentiment continues to look very unsettled, reflecting a mix of price declines in some markets, actual and expected interest rate rises, and the major tax policy changes affecting investor housing announced in the Federal budget.”
“The June month showed an abrupt cooling in consumers’ house price expectations. The Westpac–Melbourne Institute Index of House Price Expectations fell 14.9% to 128.2 dropping below the long-run average of 130 for the first time in nearly three years. Most consumers still expect prices to rise, with 52% of those with a view expecting positive gains over the year ahead. However, that is down sharply on the 66% in May.”
“Consumer savings attitudes point to a significant rise in risk aversion and a notable shift in how ‘real estate’ is being viewed.”
Next release: 11 am (AEST), on Tuesday 14 July 2026
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