Consumer confidence fell by 5% this month according to the latest survey from Westpac-Melbourne Institute in yet another sign that the Australian economy is particularly fragile as downward headwinds continue to circle.

The confidence index for March slumped below the 100 mark which divides optimism from pessimism, but interestingly, there was a sharp divide between positive and negative feedback depending on the time the survey was taken.

Official data released earlier this month showed that Australia’s economy slipped into a recession on a per capita basis during the latest quarter and had slowed considerably during H2 2018. The data collected before March 6 actually had an index read of 100.7, which would translate to net optimism, but this figure slumped to 92.7 for readings after that date, which is an 8% drop off.

Westpac’s Matthew Hassan noted on Wednesday that the official data showing two consecutive quarters where population growth had outstripped economic expansion had resulted in a sharp fall in consumer sentiment. The decline mirrors those seen in the latest NAB survey for business confidence and conditions.

The consumer and business readings point to a gloomy outlook for Australia’s economy as they are viewed as solid indicators for expected performance during the coming months. Mr. Hassan noted that index components in the consumer survey were down across the board but that the sharpest fall was recorded for short-term economic expectations.

He added: ‘With the December quarter national accounts likely clarifying what were previously somewhat mixed signals about the extent of Australia’s growth slowdown, the March weakening in consumer expectations for the economy looks likely to be sustained.’

While official economic data hit consumer sentiment this month, Mr. Hassan also pointed to the recent fall in housing prices as a major influence on the more cautious consumer outlook. This theory is supported by the fact that there was a 10% drop in sentiment among consumers in Sydney where house prices have plummeted since late 2017.

The fall in prices across Australia has helped the “time to buy a dwelling” index soar to levels not seen since 2015 as consumers take advantage of more affordable options in the housing market. The index reached its nadir in 2017 when the price boom was still very much in full swing in Melbourne and Sydney, but has since climbed by around 30%.

While the index is on the up, the overall reading is still short of the long-term average, which suggests prices still need to continue their recent downward trajectory to help bring affordability and buyer sentiment back in line with normal expectations. Price drops look a sure bet as the Index of House Expectations dropped 2.7% this month and is now 44% off the peak recorded two years ago.

Mr. Hassan added: “Weakness remains more pronounced in New South Wales and Victoria, with around half of consumers in these states expecting prices to be lower in a year’s time.”

The less-than-enthusiastic outlook for consumers has also prompted many to move money to less risky destinations. Less than one in ten want to buy into real estate, the lowest figure recorded since the 1970s, as other safer options such as bank deposits and paying down debt take precedence. Around two-thirds of those surveyed said the latter were better options right now.

The uncertainty means the Reserve Bank of Australia is likely to intervene at least twice to cut interest rates this year according to Westpac. The RBA expects the first 25-basis-point cut to arrive in August, when the “extent of spill-overs from the housing downturn, on the labor market in particular, become more apparent.’