Consumers still smiling but house hikes worry

A net 36 per cent of respondents think it’s a good time to buy a major household item. Picture / Michael Craig

Sentiment wanes for young Aucklanders.

Consumer confidence remains strong but in Auckland soaring house prices are hitting sentiment.

The ANZ-Roy Morgan consumer confidence index slipped to 118.2 this month from 118.9 in June, though a net 29 per cent of respondents expect to be better off financially in a year's time, compared to 24 per cent a month earlier.

In seasonally adjusted terms confidence rose from 118 to 119, the second monthly rise in a row.

They were less optimistic about their 12-month outlook for the economy, with a net 4 per cent expecting good times ahead, down from 9 per cent in June, while over a five-year horizon a net 13 per cent see more good times, compared to 16 per cent.

"Life still goes on for consumers amidst international shenanigans," said ANZ chief economist Cameron Bagrie.

"Consumers are 'free wheelin'. There is a lot to smile about. The labour market is improving. Job ads have risen now for five consecutive months. Skill shortages are becoming more of an issue for businesses. Both bode well for the final piece of the labour market puzzle, namely wages, to start moving up," Bagrie said.

House price expectations continued to lift - another traditional positive factor for sentiment - hitting another new high.

Auckland house price expectations rose to a record for the survey.

"Amidst soaring house prices it was notable to see sentiment actually wane in some consumer segments. Auckland is now one of the weaker regions," Bagrie said in a note.

This was particularly strongly felt among the 25 to 34-year-olds.

"With each passing week and movement in house prices in excess of income growth, affordability and the ability to save for a deposit worsens."

The survey of 1000 people showed a net 36 per cent of respondents think it's a good time to buy a major household item, unchanged from a month earlier. The high New Zealand dollar would help.

Inflation expectations eased to a 3.3 per cent annual pace from 3.8 per cent in June. Consumer price figures are set to be released next week and will likely show inflation rose 0.5 per cent in the June quarter.

- additional reporting BusinessDesk