The outlook for the property market remains uninspiring as consumer confidence drops to a nine month low.
The Australian Consumer Sentiment Index decreased by 6.3 index points during the quarter ending March 2011 to reach 104.1 Index points.
Long-term, the six month moving average has recorded a decrease of five Index points during the quarter. Westpac chief economist Bill Evans said the weak result was worse than expected and can be largely attributed to the aftermath of three consecutive rate hikes by the Reserve Bank.
According to the monthly statewide survey of consumer sentiment, during the month of April 2011 sentiment decreased in Western Australia the most (by 12.6 Index points) and also declined in New South Wales (by 1.2 Index points). Queensland experienced the greatest increase in sentiment, by 6.1 per cent, while Victoria increased by 5.2 per cent and in South Australia it increased by 3.5 per cent.
This drop in sentiment is already having a visible impact on the property market, with property prices dropping by 0.6 per cent in March, according to data from the Australian Bureau of Statistics.
Reduced confidence is resulting in reduced buyer demand, which is ultimately having a negative impact on house prices, PRDnationwide research director Aaron Maskrey said.
"While many analysts had hoped that a prolonged period of stable interest rates would build momentum in the property market, the latest figures show that activity has in fact quietened further,” he said.