Consumer sentiment around real estate has fallen to its lowest level in 44 years, despite general optimism about Australia's economy, according to a widely watched Westpac survey.

The Westpac Melbourne Institute Index of Consumer Sentiment rose by 0.1 per cent, rising from 99.6 in February to 99.7 in March, heading towards the 100-mark where the number of optimists matches pessimists.

Expectations on the economic outlook over the next year rose 1.6 per cent, while the outlook for the next five years gained 3.9 per cent.

However, quarterly data on the wisest places for savings put banks on top at 29 per cent, while real estate came in at 11.6 per cent, its lowest on records going back to 1973, according to CommSec's analysis of the data.

"Aussies have got the message. Consumers believe that now is not the best time to be putting extra money into real estate," said CommSec's chief economist Craig James.

"The preference to pay down debt is the highest in five years and just short of the highest reading on record."

Despite most people thinking property is a bad investment, house price expectations continue to rise, jumping 2.2 per cent to be 26.7 per cent above the level of a year ago.

"Even though income growth and inflation are too low and there remains ample spare capacity in the labour market, the [RBA] has no flexibility to cut rates," Westpac chief economist Bill Evans wrote in the report.

"The evidence is clear that the rate cuts the bank embraced last year in the face of low inflation fuelled house prices and household leverage.

"The bank is concerned about possible excesses in the housing market."

Markets expect the RBA will remain on hold for 2017 but will price in at least two hikes in 2018.

"We expect that the growth in the economy will slow in 2018 as the residential construction boom unwinds," Mr Evans wrote.

"Households are concerned about their finances, largely because of weak income growth."

Unemployment expectations fall

Unemployment expectations fell 3.1 per cent in March, dropping to December levels. Lower readings on that index means more consumers expect unemployment to fall over the next 12 months.

Meanwhile, the sub-index that measures "family finances compared to a year ago", dropped 5.3 per cent, and is the lowest level since June 2014 when respondents were "shaken by the May Budget announcement" that was handed down by former treasurer Joe Hockey.

The Westpac-Melbourne Institute survey is based on 1,200 respondents aged 18 and over across Australia and asks for information on news stories that have affected their views and whether or not that news has been well received.

Westpac said overall awareness of budget and tax news had dropped significantly from a year ago. Meanwhile, well-received stories included employment at 15.7 per cent, interest rates at 15.6 per cent, and international conditions at 12 per cent.

"Despite no move by the Reserve Bank over the intervening period, news on interest rates was much more positively received while the pessimism around international conditions eased," the report said.