Australian consumer confidence rose to the highest level since December 2010 as the prospect of a change of government and lower interest rates boosted sentiment among households, a private survey showed.
The sentiment index for September climbed 4.7 percent to 110.6, a Westpac Banking Corp. and Melbourne Institute survey taken Sept. 2-8 of 1,200 adults showed today in Sydney. A figure above 100 indicates optimists outnumber pessimists.
Tony Abbott’s coalition, which ousted the Labor government of Kevin Rudd on Sept. 7, is pledging to cut red tape and lower taxes to boost the $1.5 trillion economy as a China-led mining investment boom crests. Reserve Bank of Australia Governor Glenn Stevens and his board cut the benchmark rate to a fresh record of 2.5 percent last month to help revive non-resource industries.
The improvement, if sustained, “indicates that the Reserve Bank’s series of rate cuts which began in November 2011 are finally gaining strong traction with households,” said Bill Evans, Westpac’s chief economist. “It is reasonable to conclude that the election result played an important if not leading role in this strong boost.”
The sub-index tracking assessments of whether now is a good time to buy a dwelling jumped 6.5 percent to the highest level since August 2009, the report showed.
Home prices rose 5.3 percent across Australia’s eight major cities in the year to Aug. 31, according to an RP Data-Rismark home value index. Sydney home prices recorded the biggest quarterly rise since April 2009, it showed.
“The result is comparable with the boost to the index in March 1996 when the coalition was returned after 13 years in opposition,” Evans said. He predicts the central bank will keep rates on hold at the Oct. 1 meeting.
Traders are pricing in a 66 percent chance the central bank will keep rates unchanged this year, according to interest-rate swaps data compiled by Bloomberg. The RBA has eased borrowing costs by 2.25 percentage points since November 2011.