Despite the country’s overall intention to spend increasing last month, new data suggests home-buying plans dropped by 27.5 per cent.
New research published by the Commonwealth Bank of Australia is suggesting that the plan to purchase property in Australia is one that is distinctively trending downwards.
The results, which were included in the bank’s latest Household Spending Intentions (HSI) Index – a now monthly gauge of Australia’s consumer spending intentions, utilising data from 2.5 million households – noted that, over November, the home-buying intention index dropped by 27.5 per cent, contributing to a yearly decline of 17.6 per cent.
In October, the home-buying index – which follows CBA home loan applications for both owner-occupiers and investors – dropped by 1.4 per cent compared to September, but was 12.4 per cent higher compared to the same time in 2020.
Ironically, the overall HSI Index, which includes retail, motor vehicle, travel and education spending intentions, increased over November, rising 2.1 per cent for the month, and 4.5 per cent for the year.
Speaking to The Adviser, CBA chief economist and head of global economic and markets research Stephen Halmarick said that, while the trend of house-buying intentions is declining, seasonal factors and one less weekend over November have potentially contributed to an exaggerated figure.
“I think the direction is correct – down – but magnitude is overstated,” Mr Halmarick added.
But as Halmarick noted, the HSI Index also suggests that a moderate drop in the demand for housing is incoming, reflecting recent data – notably for owner-occupiers.
Data from the Australian Bureau of Statistics, for example, also suggested owner-occupier rates are dropping, finding that owner-occupier loans for first home buyers fell for the ninth consecutive month in October.
However, CBA’s prediction is that this general decline in house-buying intentions also aligns with their view of lower house price growth for 2022 and 2023.
“Dwelling prices in Australia were up 21.3 per cent [in the year to November] but the pace of monthly gains has slowed,” the HSI Index wrote.
“The slowdown in home buying spending intentions in November supports our view that prices are likely to be a more modest 7 per cent [yearly growth] in 2022.
“For 2023 we expect dwelling prices to be down – 10 per cent [yearly growth] as higher interest rates take effect.”
[Related: House price rise slowing down: CoreLogic]
Sam Nichols is a journalist at The Adviser and Mortgage Business. His reporting has featured in a range of outlets including ABC News, SBS' The Feed, and VICE.
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