Roy Morgan Update May 21, 2024: ALP Support down, Consumer Confidence & Inflation Expectations

In this week's Update, we present the latest data on Primary Voting Intention, Consumer Confidence & Inflation Expectations.

Welcome to the Roy Morgan Weekly Update.

I’m Julian McCrann, the Manager of the Roy Morgan Poll, stepping in today for Roy Morgan CEO Michele Levine who is unavailable, to deliver the weekly update.

Firstly, the Albanese Labor Government has lost support and now only has a narrow lead after Treasurer Jim Chalmers delivered the Federal Budget last week: ALP 50.5% (down 1.5%) compared to the Coalition on 49.5% (up 1.5%) on a two-party preferred basis.

If a Federal Election were held now the result would be too close to call - with a hung parliament and the support of minor parties and independents required for either the ALP or Coalition to form a minority government, the latest Roy Morgan survey shows.

Some reasons the ALP vote declined are outlined by Roy Morgan CEO Michele Levine in the Federal voting release:

“In a climate where Australians are concerned about cost of living, inflation, and the housing crisis, the Reserve Bank has drawn a causal link between the housing crisis and immigration levels.

“The Reserve Bank has stated high immigration is driving rental inflation and this creates a housing crisis for many Australians. The Government’s failure to tackle high immigration is hurting the Government – Coalition Leader Peter Dutton has stated the Coalition will cut annual permanent migration to 140,000.

“The Government’s commitment to hand billions of dollars as tax rebates to Australian billionaires to create ‘clean technology’ such as ‘Green Steel’ has NOT resonated with electors; (PAUSE)

And the $300 per year household electricity rebate will be only a ‘drop in the bucket’ compared to increased mortgage payments and rising food prices.” (PAUSE)

The other indicators show more positive results for the ALP Government. Both GOVERNMENT Confidence and CONSUMER Confidence improved this week. But they are both still low.

Government Confidence is up 3 points this week to 80.5 – and that’s up 7 points in the last two weeks.

However, the Albanese Government must be concerned that a majority of Australians, still say the country is heading in the wrong direction – 52% say wrong direction, only 32.5%, say the country is heading in the right direction.

As a result, Roy Morgan Government Confidence remains well below the neutral level of 100.

This week there is a slight boost to Consumer Confidence with ANZ-Roy Morgan Consumer Confidence up 1.8pts to 82.0.

Now over a fifth of Australians, 22% (up 3 percentage points), say now is a ‘good time to buy’ major household items while 50% (down 2 percentage points), say now is a ‘bad time to buy’ – a net improvement of 5% points.

However, despite the weekly improvement, longer-term, Consumer Confidence has now spent a record 68 weeks below the level of 85.

Consumer Confidence has moved in a narrow band of 80-85 over the last 24 weeks (well over five months) since early December.

Analysis of Consumer Confidence by Housing Status shows Australia’s housing market is split roughly equally between outright Home Owners, People Paying Off Their Home and Renters – about a third in each group.

Consumer reaction to the Federal Budget was relatively muted for both Home Owners – down 0.7 points to 85.6, and People paying Off Their Home – up 0.7 points to 75.6.

However, there was a significant boost for Renters – up 3.9 points to 83.8 – this is the highest Consumer Confidence for Renters for exactly a year – since last year’s Federal Budget.

Renters are less impacted by the Reserve Bank’s decisions on raising and cutting interest rates whereas these decisions have a large impact on the Consumer Confidence of the other two groups – especially those Paying a Home Off.

Compared to two years ago, when the RBA started raising interest rates, the Consumer Confidence of People Paying Off a Home is down 25.8 points. The Consumer Confidence of Renters is down only 5.9 points over the same period.

The Federal Budget had no impact on Inflation Expectations which this week is unchanged at 4.8%. Australians now expect annual Inflation to be 4.8% over the next two years.

Inflation Expectations have stayed within a narrow band of 4.8% to 5.3% since early December.

Now looking at Australians suffering from mortgage stress.

Roy Morgan is the only company to measure ‘mortgage stress’ every month. The latest ‘mortgage stress’ figures show An increase of 29,000 in April to 1,560,000 (one million 5 hundred and 60 thousand) mortgage holders – 30.8% of all Australians with a mortgage are ‘At Risk’ of mortgage stress.

The level of mortgage stress in April represents an increase on March but is still below the highs reached in January and February 2024 – soon after the RBA’s most recent interest rate increase in November 2023.

The lower level of mortgage stress in March and April, compared to earlier, has been driven by rising household incomes which has reduced the financial pressure on some mortgage holders.

In addition, the extended pause in interest rate increases since November 2023 has allowed this growth to “catch up” and reduced the financial pressure on some mortgage holders.

The same reduction in mortgage stress was seen after the RBA paused rate increases for four months from July – October 2023.