Monetary policy stimulus is clearly working for the housing market, according to Michael Blythe Commonwealth Bank latest Household Spending Intentions series.
The latest data from the Commonwealth Bank Household Spending Intentions (HSI) series released today shows the sharp increase in home buying intentions is continuing.
Beyond housing, the overall picture is one of a gentle upturn in consumer spending intentions.
CBA’s Chief Economist Michael Blythe said the sharp upswing in home buying intentions continues and intentions are now approaching the record highs seen in early 2017.
At a glance:
"Current HSI readings are consistent with an ongoing increase in dwelling prices and a bottoming out in residential construction activity," said Mr Blythe.
Home Buying Spending Intentions. Source: CBA Housing Spending Intentions series
“The ongoing improvement in the home buying intentions series indicates that the low point for residential building construction will probably be around mid 2020."
Mr Blythe said retail spending intentions show a modest improvement is in place.
“After a poor September, there was a small pick-up in retail spending intentions data in October,” said Mr Blythe.
Retail Spending Intentions. Source: CBA Housing Spending Intentions series
“The latest edition of the Commonwealth Bank HSI series, which incorporates data to the end of October, supports the RBA’s view that the economy has reached a ‘gentle turning point’ but the improvement is quite modest given the size of tax rebates and interest rate cuts delivered in recent months.
“By fuelling fears about the economic outlook, rate cuts are probably blunting some of the potential boost from tax rebates and rising house prices."
The HSI series offers a forward-looking view by analysing actual customer behaviour from CBA’s transactions data, along with household spending intentions from Google Trends searches.
This combination adds to insights on prospective household spending trends in the Australian economy.
Mr Blythe points out that trends in some non-retail spending look reasonably encouraging.
“Travel spending intentions are increasing, albeit from low levels, entertainment spending intentions are rising again and education spending intentions are high and rising,” said Mr Blythe said.
“Health and fitness spending intentions have, however, levelled out, while the recent slight improvement in motor vehicle purchase intentions from deeply negative territory has now stalled.”
View the Commonwealth Bank Household Spending Intentions (HSI) series here.
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