Most of the upswing in consumer confidence that came as a result of the Government’s Budget has been reversed this week, according to the latest ANZ-Roy Morgan Consumer Confidence findings.

Consumer confidence fell 4.6 per cent, dropping to 111.0. The economic outlook for the next year dropped by 8.2 per cent, while the economic outlook for the next five years saw a decline by 2.9 per cent.

“ANZ-Roy Morgan Consumer Confidence plummeted this week as global economic and financial turmoil dominated the news flow and caused weakness in equity markets,” ANZ Chief Economist Warren Hogan said

“Australians appear acutely aware of the threats posed to economic stability by both the Greek crisis and China’s equity market collapse.”

Mr Hogan said that a drop of this magnitude within just one week should be taken seriously, saying it points to “the underlying fragility” in the perceptions that Australia’s households hold regarding the current economic environment.

From a household point of view, a forecast on spending dropped significantly. The number of households with positive views on ‘time to buy a major household item’ dropped by 8.1 per cent.

Mr Hogan highlighted the ongoing rise in housing prices as a key factor in the drop in confidence.

“The strong point for the Australian economy continues to be housing. The housing sector has shown strength for some time, however it appears solid house price growth in Sydney and Melbourne have not boosted confidence as much as pre-GFC,” Mr Hogan said.

“The inability of confidence to gain momentum in the past year suggests that the constant speculation about a housing bubble may actually be working to unnerve consumers. This suggests that evidence of an orderly softening in Sydney and Melbourne property markets may help to support consumer confidence as persistent bubble speculation subsides.”