Consumer confidence rises from 14-month low in post-election bounce

New Zealand consumer confidence snapped three months of falls to climb from a 14-month low in December, as rising house prices and falling petrol costs boost post-election optimism as consumers head into the peak Christmas season.

The ANZ-Roy Morgan consumer confidence index rose 4.7 points to 126.5 in December, above the long-term average of 118.8. The current conditions index increased 6.6 points to 126.1, while future conditions gained 3.4 points to 126.8.

"Petrol prices have come down, delivering an effective pay rise" said Cameron Bagrie, ANZ Bank New Zealand's chief economist said in his report. "House prices are firming again. Mortgage rates have fallen."

New Zealand's Sept. 20 general election had been cited as a reason for everything from lower building consents to a drop off in share market activity, reduced house sales and investors dumping shares in power companies. The re-election of the National-led administration has been expected to see a resumption in activity after uncertainty caused by the opposition parties' proposal to introduce a capital gains tax and other regulatory reform.

"A pre-election lull has been replaced by a post-election bounce," Bagrie said.

All but two survey measures rose in December. Today's survey shows households feel better off financially, compared to a year ago, with a net 9 percent of respondents more upbeat about their current position, rising from November's 4 percent, and a net 29 percent expected to be better off in a year's time, advancing from 25 percent last month.

Off the 1,001 households surveyed, a net 24 percent expect good economic times in the next 12 months, up from 22 percent in November, and looking five years ahead a net 28 percent expect continuous good economic times, compared to 23 percent last month. More people thought it was a good time to buy a major household item, rising to a net 43 percent, from last month's 35 percent.

Of those surveyed, 70 percent predict interest rates to rise over the next two years, at an annual pace of 3.1 percent and 74 percent expect house prices to rise an annual 4.4 percent over the next two years.

(BusinessDesk)