More Australians now considering property investment: CBA

A new report released by Commonwealth Bank (CBA) has suggested there has been a pivot upwards in Australians interested in purchasing property, with data revealing a sudden spike in interest. 

The figure, which was included in the major bank’s Household Spending Intentions (HSI) report for February this year, notes that home buying intentions – determined by both CBA home loan applications and Google trends data – increased by 29.6 per cent month-to-month. 

This increase was distinctively the highest monthly growth reported over the period, followed by transport at 11 per cent. 

By comparison, the spending intentions for motor vehicles (-0.4 per cent), insurance (0.6 per cent), entertainment (-3.4 per cent), travel (-6.9 per cent) and retail (-8.4 per cent) all reported drops over the same timeline. 

The sudden momentum refracts the recent home buying intention trend reflected in previous HSI reports, which has been reported as freefalling since the latter end of last year. 

However, while these statistics do suggest there is a growing capacity for Australians to purchase property, this new index figure remains 4.4 per cent down compared with last year. 

By comparison, every other spending category, excluding entertainment, included in this report has increased overall year-on-year, coinciding with this month’s overall HSI Index (107.3), which reported a yearly increase of 5.5 per cent.

The HSI Index also reported a marginal monthly growth of 1.8 per cent. 

Speaking of the overall index for this month, CBA chief economist Stephen Halmarick commented that the increased intentions in certain categories, including home buying, supports the bank's economic outlook for 2022 being “a year of solid growth”.

Mr Halmarick later added that the bank also predicts that the cash rate will increase later this year. 

“Given surging inflation as well as strong employment and wages growth data, we maintain our view that the Reserve Bank of Australia will need to raise interest rates earlier than many expect, with an initial increase to 0.25 per cent in June this year, rising to a peak of 1.25 per cent in early 2023,” he said.

The latest report adds that CBA also expects that national dwelling prices will peak in mid-2022, roughly around the same time when the major bank anticipates an increased cash rate. 

However, this perspective isn’t universally shared. 

Last month, Bluestone Home Loans consultant economist Dr Andrew Wilson said that he believes the RBA will not increase the cash rate, noting that current wage growth is below the 3 per cent threshold alluded to by the central bank as necessary for a hike.

[Related: Construction costs rise highest in 16 years]