A Commonwealth Bank report on spending intentions shows Australians are still keen to buy a home, despite house prices rising sharply in recent months.
CBA’s latest report shows buying intentions were stronger than May 2020 levels as both the number of mortgage applications and Google searches increased as residential property prices continued to march higher.
CBA forecasts residential property prices to rise 14 percent through 2021 and 2022.
“The high reading is no surprise given the strength in the housing market,” said CBA economist Belinda Allen.
"Home prices continue to lift, supported by low-interest rates and the return of property investors to the market.”
Education and health and fitness spending intentions rose in May, reflecting the growing optimism of Australian consumers as the economic recovery turns into an economic expansion.
“Together with the strong labor market and positive wealth effects from rising dwelling prices, we expect consumer spending to support Australia’s economic growth in 2021,” said Allen.
Education spending intentions extended their recovery in May, with the number of education spending transactions up from both May 2020 and May 2019. However, the report showed that the value of education spending was still below May 2019 levels, even as last month’s data posted a strong improvement to May 2020 figures.
“Despite the recent improvement, we’re seeing the lasting impact of Covid travel restrictions and international border closures on Australia’s education sector, particularly universities,” Allen added.
Health and fitness
Health and fitness spending intentions rose year-on-year as Aussie households resumed spending on dentists and orthodontists, optometrists, and other elective practices that were shut during lockdown.
Meanwhile, travel spending intentions have tracked higher on year ago levels when almost all travel was shut down are lower than 2019, reflecting the lasting impact of the closure of international borders.
The report pointed out that May data continues to bear the impact of last year’s Australia-wide lockdown and subsequent reopening of the economy. The economist said retail spending intentions appeared to cool in May 2021 from April 2021 reflecting the impact of the economy reopening in May 2020.
While the overall retail category was stronger this year when compared to May 2020. However, when compared to May 2019 there are areas of weakness such as dry cleaning and laundry services, door-to-door sales, and duty-free stores.
“Part of that is the lasting impact of working from home, as we don’t need to dry clean as much anymore,” Allen said.