Australian consumers perk up in Oct, keener on home buying

SYDNEY, Oct 10 (Reuters) - A measure of Australian consumerconfidence rose for a second month in October as a cut ininterest rates left households feeling more secure in theirfinances and about buying a new home, though many remainedcautious on the longer-term economic outlook.

The poll of 1,200 people by the Melbourne Institute andWestpac Bank showed its index of consumer sentimentrose 1.0 percent in October to 99.2, after a 1.6 percentincrease the previous month. The index was up 2 percent onOctober last year and shows optimists now almost equalpessimists.

The survey was conducted in a week when the Reserve Bank ofAustralia (RBA) cut interest rates a quarter point to athree-year low of 3.25 percent, and left the door open tofurther easing.

The prospect of lower mortgage costs showed in the index offamily finances compared to a year ago which jumped 5.3 percentin October. Respondents were also more optimistic about theoutlook for their finances over the next 12 months.

In a promising sign for retailers, the survey's measure ofwhether it was a good time to buy a major household item climbed3.7 percent. The index of whether it was a good time to buy ahome also surged 9.6 percent to be up 17.9 percent in two monthsand the highest since September 2009.

"The most encouraging result from today's survey came fromthe index tracking views on dwellings," said Westpac chiefeconomist Bill Evans.

"This message is consistent with other recent evidence offirming auction clearance rates. The response of the housingmarket to the recent rate cuts will be very important to watch."

The RBA has singled out the depressed home-building sectoras one area that it would like to see strengthen.

Still, the survey showed people continued to fret about thefuture with measures of expectations well below those coveringcurrent conditions.

The index of expectations for the economy in the next 12months dipped 2.4 percent while that for the next five yearsfell 4.6 percent.

Evans characterised this as a disappointing result whichargued for further cuts in interest rates.

"The Reserve Bank Board next meets on November 6. We expectthat the Board will decide to cut the overnight cash rate by afurther 25 basis points," he said.

Evans expects rates to bottom at a record low of 2.75percent early in the new year.

(Reporting by Wayne Cole; Editing by Eric Meijer)

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