House market drives up spending and consumer confidence

A strong housing market and the reallocation of international holiday spending boosted consumer confidence over January.

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Consumer confidence rose 2 points, much to the relief of retailers.

The monthly ANZ-Roy Morgan Consumer Confidence Index rose 2 points this month to 114, which is still short of its historical average of 120.

The more closely followed measure of whether people think it’s a good time to purchase a major household item also inched higher, up 2 points to 28.

“Essentially, the New Zealand economy has been going a lot better than expected in recent months, which is great, but the heart of the activity really is the housing market and that tends to make consumers more upbeat, a little bit wealthier on paper, more willing to spend,” ANZ chief economist Sharon Zollner said.

“Though of course it’s absolutely not good news for everybody, with those trying to save a deposit of course needing to spend less and save more.”

The reallocation of spending that would have gone towards to international holidays was also compelling people to spend, she said.

“These drivers are temporary though, so we are seeing retailers feeling very relieved and happy with how things are going and also a little bit cautious about what the future may bring.”

Zollner expected the housing market to cool later this year due to the sheer unaffordability of properties, which would likely have flow on effects for consumer.

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