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Consumer sentiment improves

One in four Australians thinks that real estate is the wisest place for savings, according to the most recent Westpac Melbourne Institute Index of Consumer Sentiment.

The monthly index lifted 4.7 per cent to reach 102.2 in June from 97.6 in May.

The main swing has been towards a more favourable view on real estate with 24.6 per cent nominating this as the ‘wisest place for savings’ (up from 21.3 per cent in March).

Westpac Senior Economist Matthew Hassan pointed out that the index has now risen back over the 100 level, indicating that optimists now outnumber pessimists again, although the margin is slim.

“It appears that some of the factors behind the sharp drop in sentiment in May were temporary”, Mr Hassan said.

“In particular, concerns stemming from the Federal Budget may have eased somewhat in June.”

All components of the Consumer Sentiment Index recorded some improvement between May and June.

The strongest gains were around family finances, both in relation to ‘a year ago’ and ‘over the next 12 months’, even though both of these sub-indexes remain below their long run average levels.

“Clearly consumers see this as an opportune time to make major purchases or enter the housing market, likely reflecting the low cost of finance and comparatively good affordability”, Matthew Hassan said.

He added, however, that concerns about the economic outlook are likely discouraging many buyers from going ahead with actual purchase decisions.