Home-buying ambitions continue to sink: CBA

The Commonwealth Bank’s Household Spending Intentions (HSI) Index revealed that, over June, home-buying intentions fell by 3.6 per cent compared to March, and by 8.1 per cent compared to 12 months earlier. 

This fall continues a consistent pattern observed with property purchasing intentions across Australia. 

According to previous HSI data, home-buying intentions fell significantly during both April and March, ending a brief spurt of momentum that was recorded over February.

However, this trend was not observed equally across consumer habits, with the vast majority of the data suggesting that more Australians are spending. 

As highlighted in this latest index, the overall HSI Index – which aggregates an average figure for consumer activity – was recorded at 117.3 for June – a 90-bp lift from March and an 11.9 per cent boost year-on-year.

Further, the only spending categories that were also reported as falling were retail (-0.3 per cent) and entertainment (-3.8 per cent). 

Home buying was the only category to record both monthly and yearly losses in this latest index. 

Separate findings also suggest that more Australians are spending each month. New figures released by the Australian Bureau of Statistics suggest that, as of the start of June, household spending has on average consistently increased since January. 

According to CBA’s chief economist Stephen Halmarick, the findings reflected that the economy is recovering from the previous lockdowns related to COVID-19. 

“Australian consumer spending remains higher than a year ago, as the economy recovers from the 2021 lockdowns, with the CommBank HSI Index up 11.9 per cent relative to June 2021,” Mr Halmarick said. 

“However the index’s modest gain in June was narrowly based, driven mainly by the increased price of many goods and services, such as petrol, which helped drive higher spending on transport, along with increased spending on education and household services.”

The ABS’ latest figures also reported that spending growth was tied to both petrol and transport, with the bureau’s head of macro-economic statistics, Jacqui Vitas, noting that air travel has continued to recover, and that “higher petrol prices increased motor vehicle running costs”.

However, speaking on the decline in home buying, Mr Halmarick said this reflected the recent rise of the cash rate by the Reserve Bank of Australia.

Earlier this month, the RBA hiked the cash rate to 1.35 per cent, marking the third-consecutive lift made by the central bank.   

“Interest rate-sensitive sectors of the economy are clearly starting to show the impact of recent Reserve Bank interest rate increases, with discretionary spending on entertainment, home buying and retail all declining on the month,” Mr Halmarick said. 

“With further interest rate increases expected through the remainder of 2022, we would expect to see discretionary spending weaken further in coming months.”

Earlier this month, PropTrack released figures that suggested the market has recorded its “sharpest slowdown” in more than 30 years, while data released by CoreLogic last week also noted that clearance rates are their lowest in more than two years.

[Related: Rates to boost by 50 bps, pause by September: Westpac]