Rising interest rates, petrol prices and unemployment have knocked consumer confidence, the latest survey shows.
The Westpac McDermott Miller Consumer Confidence Index slipped to 114.7 in the three months to March, down from 116.9 in the previous quarter.
A reading over 100 indicates optimists outweigh pessimists.
Westpac chief economist Brendan O'Donovan says consumer confidence remains bouyant, but has waned over the last six months.
Along with higher interest rates, fuel costs and jobless numbers, the housing market "came to a jarring halt" at the end of last year, and there is uncertainty over potential tax changes.
The survey has a margin of error of 2.5%.