SYDNEY, Oct 10 (Reuters) - A measure of Australian consumer confidence bounced only modestly in October following two months of steep losses with falling home prices one likely drag, a survey showed on Wednesday.
The Melbourne Institute and Westpac Bank index of consumer sentiment rose 1.0 percent in October, from the previous month.
Sentiment dropped 3.0 percent in September as political instability and hikes in mortgage rates by most of the big banks soured the public mood.
The October reading, compiled from a survey of 1,200 people, was up a bare 0.1 percent on a year earlier at 101.5, meaning optimists just outnumbered pessimists.
“Several positives have likely helped stabilise the Index, including strong economic growth, a solid labour market and ongoing recoveries in the previously weak mining states,” said Westpac Chief Economist Bill Evans.
The survey suggested that while respondents were a bit more upbeat on the near term outlook, the longer-term picture remained cloudy.
Its measure of economic conditions for the next 12 months rebounded by 2.6 percent, but the measure for the next five years dipped another 0.3 percent.
The index of family finances compared to a year ago bounced 2.6 percent, while the outlook for the next 12 months added just 0.6 percent.
Likewise, the measure of whether it was a good time to buy a major household item inched up 0.1 percent, after a 3.3 percent drop in September.
Falling property prices might be weighing on the general mood.
Consumer expectations for house prices fell 7.4 percent in October to the lowest reading since the question was first run in May 2009.
“The state detail showed a particularly sharp 20.3 percent drop in Victoria, suggesting the price correction in Melbourne, which has been slower to come through than in Sydney, is starting to bite,” said Evans.
Home prices have been falling in Sydney for much of the past year as tighter lending standards and low affordability cooled the once red-hot market. (Reporting by Wayne Cole; editing by Eric Meijer)