Building on a growing trend, the major bank’s latest HSI report found that home buying intentions set a new series high last month, as both home loan applications and Google searches increased again.
The HSI series, which intends to provide a forward-looking view by analysing actual customer behaviour from CBA’s transactions data, along with household spending search activity from Google Trends, found that home buying spending intentions increased in March to a new series high – up 40 per cent on an annualised basis.
According to CBA, residential property prices in Australia are expected to be up 8 per cent in 2021 and 6 per cent in 2022, with house prices expected to be 9 per cent higher this year.
The major bank noted that while part of the strength reflects the declines seen at the start of the COVID-19 period last year, the strong increase in March followed an increase in home loan applications and Google searches.
The bank said it expects the home buying market to be a key source of support for the Australian economy in 2021 – driven largely by the very low level of interest rates.
“We continue to see demand for residential property as a key source of support for the Australian economy in 2021,” CBA chief economist Stephen Halmarick said.
Indeed, the report showed improvement across five of the seven spending categories, including travel and entertainment, while health and fitness spending intentions remained the same and retail spending intentions dropped lower.
“The stronger Household Spending Intentions report is another signal that Australia’s economic recovery is ongoing,” Mr Halmarick said.
“The travel sector was among the hardest hit by the onset of the COVID pandemic, with border closures and a countrywide lockdown stifling nearly all travel-related activity.
“A year ago, bars, clubs, restaurants and movie theatres wrangled with the swiftly escalating restrictions in the lead-up to a countrywide lockdown. This March, the picture for this sector is much improved, as pent-up demand among consumers helped spur both actual and prospective spending on the category,” Mr Halmarick explained.
“This month’s data, while distorted by base effects, still demonstrates how far the sector has recovered since last year.”