The Commonwealth Bank Household Spending Intentions (HSI) series has revealed that home buying spending intentions were lower in June 2021 relative to June 2020.
However, home buying spending intentions were higher in June 2021 relative to June 2019, CBA data showed.
This medium-term improvement in trends was attributed largely to an increase in home loan applications, as well as Google searches.
This is expected to keep upward pressure on house prices, it added.
CBA has previously forecast property prices to rise by 14 per cent over 2021 and 2022.
In his appearance before the House of Representatives economics standing committee earlier this year, CBA CEO Matt Comyn upgraded his property price growth forecast for calendar year 2021 from 8 per cent to 10 per cent.
Ratings agency Fitch raised its home price expectations for Australia, predicting that prices would spike by as much as 16 per cent in 2021 amid low mortgage rates, extended support during the COVID-19 crisis, and faster economic recovery.
A KPMG report stated that house prices are expected to be between 4 per cent and 12 per cent higher by end-2023 than they would have been in the absence of the COVID-19 crisis, while unit values are expected to be up to 13 per cent higher.
Figures from the Australian Bureau of Statistics (ABS) showed that new home loan commitments rose by 4.9 per cent in May 2021 (seasonally adjusted) to a record high of $32.6 billion.
The CBA HSI series report also showed that motor vehicle spending intentions were down in June 2021 compared with June 2020, reflecting both a decline in spending and lower Google searches.
However, spending was higher relative to June 2019, although Google searches remained lower.
Generally, motor vehicle spending has been strong through the first half of 2021, supported by changed transport preferences due to the pandemic and the wealth effect from rising house prices, according to CBA.
Spending intentions increased for education as well as health and fitness, but was down across retail, entertainment and travel, the HSI series showed.
CBA chief economist Stephen Halmarick said that a fall in spending intentions in most categories in June 2021 relative to June 2020 was unsurprising given elevated household spending last year as most parts of the country emerged from the initial COVID-19 lockdown.
However, he noted that spending intentions across most categories had risen compared with June 2019 (considered the last “normal” year), which he said was indicative of the continued strength of the economy.
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Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.