New Zealand consumer confidence dropped in the September quarter as the slowing housing market dented optimism about the future, although people felt more upbeat about their current financial situation.

The Westpac McDermott Miller consumer confidence index fell 1 point to 112.4 in the September quarter, staying above the long-run average of 111.4. A reading above 100 indicates optimists outnumber pessimists, and the survey has been above that level since March 2011. The present conditions index gained 1.8 points to 112.3 while the expected conditions index dropped 2.9 points to 112.5.

The survey showed people's view of their current financial situation improved, up 3.8 points to a net 5.4 per cent better off from a year earlier, while their expected financial situation dropped 3.7 points to net 5.6 per cent positive.

"While consumer confidence has eased a little, households remain in good spirits," Westpac Banking Corp chief economist Dominick Stephens said.

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"Large numbers of households are reporting that their financial position has improved. And although expectations for the coming year have softened, households remain fairly upbeat about the economic outlook."

A net 13.4 per cent of the 1,553 people surveyed between Sept. 1 and Sept. 10 expected the economy to improve over the coming year, down from 18.2 per cent in the June period, while a net 18.6 per cent see better times for the economy over a five-year period, down from 18.8 per cent in June.

Westpac senior economist Satish Ranchhod said the fall in confidence in the latest quarter may reflect concerns about the slowdown in the housing market, which could become a more pressing concern due to record high levels of household debt, much of which is leveraged against housing assets.

"Paying down debt doesn't appear to be a major concern for households right now," Ranchhod said. "With the housing market slowing, this could have an important impact on households' financial health over the coming years."

The number of households who think now is a good time to purchase a major household item remained low, down 0.2 points to 19.2 per cent in the quarter, below the long-run average of 26.3 per cent and a five-year low. This likely reflects the housing market slowdown, Ranchhod said. However, spending on entertainment and leisure rose to a 10-year high.