By Aimee Chanthadavong

The housing market has helped boost consumer confidence in November with the Westpac Melbourne Institute Index of Consumer Sentiment increasing by 1.9 per cent from 108.3 in October to 110.3.

Westpac's chief economist Bill Evans said these are the highest reads since the July-December period in 2010 when the Index averaged an impressive 114.

“It is encouraging that the Index has returned to these levels after it surged 4.7 per cent in September following the election result.”

“The survey was conducted in a week when the Reserve Bank kept rates on hold and the unemployment rate was reported to have held at 5.7 per cent. Importantly, house prices were reported to have risen by 1.9 per cent in the September quarter, with prices in Sydney rising by 3.6 per cent to be up by 11.4 per cent for the year.

“Melbourne house prices were reported to have risen by 1.9 per cent for a yearly gain of 6.8 per cent while movements in Brisbane (1.2 per cent qtr; 4.1 per cent yr); Perth (0.2 per cent qtr; 8.6 per cent yr) and Adelaide (–0.6 per cent qtr; 1.0 per cent yr) were less impressive.

“Not surprisingly, the confidence of respondents who wholly own their house was boosted by 6.1 per cent whereas those folks who are renting registered a drop in confidence of 2.8 per cent.”

This increase is a welcomed sign for retailers ahead of the busy Christmas period with the Index showing a 44.4 per cent rise in the sub-index tracking views on "whether now is a good time to buy a major household item".

Australian National Retailers’ Association (ANRA) CEO Margy Osmond said this indication will be crucial for the Christmas trading period.

“The survey showed a 1.9 per cent increase in overall confidence compared with October, including a solid 4.4 per cent rise in respondents saying it’s a good time to buy a major household item,” she said.

“Consumer sentiment about family finances compared with a year ago is now up 8.3 per cent on November 2012’s figure and there’s hope this will be reflected in a greater willingness to spend over the Christmas period. 

“Retailers will continue to watch these numbers carefully with November and December clearly the busiest months for Christmas shopping.

“The countdown to Christmas for retailers is well under way and we are now in a much stronger position heading into Christmas in comparison to 2011 and 2012 – our forecast of 4 per cent year-on-year growth looks a lot more achievable.”