The ANZ-Roy Morgan consumer confidence survey for November fell by 5 points to 80.7, and is tracking at close to its lowest level on record:
Confidence has fallen especially hard for mortgage holders, a situation that will likely worsen “as more and more households roll onto sharply higher mortgage rates and the flow-on effects of the ongoing slowing in the housing market become harder to miss”:
Worryingly for the economy, “a net 31% of households think it’s a bad time to buy a major household item, a 9-point deterioration to the lowest level since COVID first hit”:
ANZ notes “there are significant headwinds for consumer confidence and spending: the rising cost of living, rapidly rising interest rates, and falling house prices, as well as general uncertainty about the economic outlook – clear in this month’s survey, where perceptions of the medium-term economic outlook were very weak”.
Finally, “interest rate increases certainly are biting, as demonstrated by expectations for house price increases petering out completely, and the fact that both overall confidence and the answer to whether it’s a good time to buy a major household item are lower amongst households paying off a mortgage”:
New Zealand’s consumer confidence could fall further given the Reserve Bank last week explicitly forecast a recession in 2023 alongside a 20% peak-to-trough decline in house prices.
Moreover, Westpac warned that more than half of New Zealand’s mortgages will come of their cheap pandemic fixed rates next year, which will see many borrowers “refixing at rates that are 3 percentage points higher than those they are currently on”.
All of which is dire news for New Zealand Prime Minister Jacinda Ardern, who will head to an election in late 2023 with the economy at or near recession, housing wealth slashed, and thousands of households in severe mortgage stress.
