Australian consumer sentiment slips into ‘deeply pessimistic’ territory in June

Australian consumer confidence has slipped into “deeply pessimistic” territory as households battle with persistent cost-of-living pressures while expectations for the housing market also cooled.

A closely followed survey by Westpac and the Melbourne Institute declined nearly 3 per cent in June to 80.6 — among the weakest seen in the 50-year history of the survey. A reading below 100 means pessimists considerably outnumber optimists.

“The survey detail shows cost-of-living issues remain front and centre, the temporary halving in fuel excise tax providing only a small and brief reprieve,” Westpac head of Australian macro-forecasting Matthew Hassan said on Tuesday

“Meanwhile, other concerns may be starting to emerge with a sharp drop in house price expectations suggesting some consumers are becoming more unsettled about the impact of recently announced tax changes.”

Last month’s Federal Budget unveiled reforms to curb tax breaks for property investors in order to boost ‌housing affordability.

The reforms, which include an overhaul to the capital gains tax, have proven unpopular and the Opposition had accused Prime Minister Anthony Albanese of breaking election promises.

Adding to household’s financial pain was last month’s 0.25 percentage point rate hike that reversed the Reserve Bank’s three cuts last year, taking the cash rate back to 4.35 per cent for the first time since February 2025.

“Housing-related sentiment continues to look very unsettled, reflecting a mix of price declines in some markets, actual and expected interest rate rises, and the major tax policy changes affecting investor housing announced in the Federal Budget,” Mr Hassan said.

The RBA next meets on June 15-16. The board is widely expected to hold interest rates to assess the impact of the energy price shock and significant monetary tightening.

“The negative impact on Australian consumers is becoming clear,” Mr Hassan said.

But he said the RBA’s more pressing concerns were still likely to be around inflation, which continues to track above its 2 to 3 per cent target range and the full impact of higher energy costs still to come.

“While there is room for the board to take a quick breather, we still expect further rate hikes in subsequent meetings,” Mr Hassan said.

Last week, RBA deputy governor Andrew Hauser defended the institution’s approach to interest rates after it fully reversed cuts in 2025. He justified the cuts by pointing to economic conditions in 2025.