Roy Morgan has released its New Zealand consumer confidence survey for July.
Confidence remained at recessionary levels, with households “understandably worried, with strong inflation eating into budgets, interest rates higher, house prices falling, and uncertainty ongoing”.
Turning to the sub-indices, the majority of respondents expect to be worse-off next year:
They expect the economy to be worse in 12 month’s time:
They also expect the economy to be worse five years ahead:
In an especially bad omen for consumer spending, Kiwis are expecting to spend less on major household items:
Mortgage indebted Kiwi households are also showing far more pessimism than households not paying off mortgages, which is understandable given the aggressive rate hikes from the Reserve Bank:
As previously reported, New Zealand house prices have fallen hard in response to the Reserve Bank’s aggressive monetary tightening. The latest REINZ House Price Index reported a sharp 5.4% decline over the June quarter, with all major urban areas registering quarterly falls. Whereas the Trade Me property index posted a record a 1.9% monthly fall in June amid “skyrocketing supply”.
This follows a 29% decline in the value of mortgage finance commitments over the 2021-22 financial year, amid the lowest number of June mortgage originations on record:
Roy Morgan’s consumer confidence survey suggests more pain for the housing market, with more Kiwis (35%) expecting house prices to fall over the next two years than to rise (33%):
This is a dramatic turnaround from the end of 2021 when 68% of respondents expected New Zealand house prices to rise.
The Reserve Bank last month stated that it would continue tightening monetary policy to contain inflation, which hit a 32-year high 7.3% over the June quarter.
Therefore, Kiwi buyer sentiment will remain weak and house prices will continue to fall. How far depends on how aggressively the Reserve Bank hikes rates.
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