CBA says more Aussies than ever intend to buy a house

Australians’ appetite for home ownership is continuing to grow, as research from the Commonwealth Bank of Australia shows house prices are expected to rise by 9 per cent in 2021.

CBA’s Household Spending Intention report showed home loan applications and Google searches for houses in February rose to their highest level since the bank started tracking the data in 2015.

Australia’s biggest bank reiterated its rosy forecasts for home values - with all dwellings expected to rise by 8 per cent this year, with detached houses to rise by 9 per cent.

In 2022, CBA said it expected a 6 per cent lift in dwelling prices across the board.

“We continue to expect 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,” the report said.

CBA chief economist Stephen Halmarick said the improvement in the data was consistent with other signs that the Australian economy continued its recovery in the early months of 2021.

“Fourth quarter data showed that economic growth improved further at the end of 2020, with a “V-shaped” recovery and we now expect that the Australian economy will grow by 4.4 per cent in 2021,” Mr Halmarick said.

Mr Halmarick, however, said a risk to this outlook was the looming expiry of JobKeeper, but recent CBA research said any effects of the stimulus being wound back would be temporary.

“Our view is that the negative impacts of the end of JobKeeper will be short-lived and that the strength in the labour market, the large savings pool generated throughout 2020 and, as shown by the HSI, the solid momentum in spending and home buying, will see the economy transition successfully through the end of JobKeeper,” he said.

CBA’s report showed retail spending intentions softened in February, even as actual spending was stronger than at the same time last year.

Google searches fell considerably in the month, a contrast to the 12 months to the end of February where strong increases were recorded in spending on clothing, groceries, furniture, paint and hardware and jewellery and watches.

Spending on dry cleaning, tailors and duty free stores exhibited weakness, the report said.

Travel spending intentions were steady in the month, following recent gains after COVID-19 border restrictions were eased around the country.

Google searches related to travel rose strongly in February, while actual spending on travel was down on the month as well as compared to the same time last year.

The biggest annual increases in travel-related spending were for campers, caravans and campgrounds.

CBA said it expected spending on airlines, cruise ships, hotels and motels to improve in coming months due to the federal government’s half-price flights tourism stimulus package.

Meanwhile, auction results from Ray White Group shows buyers continue to flood markets across the country, with demand reaching record levels.

Ray White said the number of buyers viewing properties across its websites hit 5.27 million in February, a 65 per cent increase on the same time last year.

More than 57,000 enquiries were recorded over the month, Ray White said.

At auctions, the real estate agency network said it recorded an average of 6.5 registered bidders per auction in February, with vendors achieving nearly 12 per cent more under the hammer than the highest offer prior.

Loan pre approvals are also up, with the number of people obtaining authorisation for a home loan 53 per cent higher than in February 2019.

Ray White managing director Dan White said there was a combination of factors contributing to buyer confidence.

“Firstly, interest rates are at record lows. Importantly, the general consensus among economists is that they will remain at these low levels for the foreseeable future,” Mr White said. 

“Secondly, banks and lenders remain very supportive of lending for residential property. Then thirdly, record levels of government stimulus continue to support buyer sentiment. 

“At the moment, despite our expectation of a lift in new listings numbers in March and April, buyer demand is still outpacing new stock additions. 

 “Demand is expected to remain strongest from first-time buyers and upgraders, many of whom are spending money on a house they might otherwise have used overseas on holidays.”