Westpac's move to slug owner-occupiers with a home loan rate rise and concerns about slowing momentum in the property market have dented consumer confidence.
The ANZ/Roy Morgan weekly consumer confidence index dipped two per cent last week, after jumping 5.1 per cent the previous week.
The decline was likely driven by increasing concerns about the future of the property market, ANZ's co-head of Australian economics Felicity Emmett said.
"Higher mortgage rates and falling auction clearance rates are pointing to weaker growth in house prices," she said.
Ms Emmett said housing has been a key pillar of growth this year, but falls are expected in residential prices and construction.
Any softening in the sector would weigh on wider confidence and employment, she said.
"Without that support in 2016, we expect the economy will need further stimulus in the form of another 50 basis points of rate cuts from the (Reserve Bank)," Ms Emmett said.
But while speculation about a November rate cut is growing, ANZ continues to back a February change in policy settings from the central bank.
Last week's dip in confidence was broad based, with consumers' views of whether now is a good time to buy a major household item sliding 3.1 per cent, which is 7.9 per cent below the subindex's long-run average, the survey found.
And while respondents' views on economic conditions in the next five years fell 1.2 per cent, it appears to be on an upward trend supported by confidence in the new Turnbull government.
