Home buying intentions have reached a record high

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on January 21, 2020
Home buying intentions have reached a record high

Image by Paul Brennan from Pixabay 

Intentions to buy a new home are at record highs at the moment, according to new data.

The latest Commonwealth Bank (CBA) Household Spending Intentions Series data (HSI) showed home buying intentions moved higher again in December after moving up in November.

Based on CBA'S own household transactions data and Google Trends analysis, the series suggests household spending intentions are now at a record high.  

HSI CBA

Chief Economist Michael Blythe said the data confirms dwelling prices should continue to rise in the first half of 2020 after a strong finish to 2019. 

The improvement in HSI home buying intentions also suggests the economic drag from falling residential construction should be nearing its end. 

"Past cycles show that leading indicators like building approvals turn about three months after home buying intentions start to lift," Mr Blythe said.

"A bottoming in the construction cycle would remove a major growth drag on the economy, and also helps retailing.”

The table below displays a snapshot of some low-rate, variable, owner-occupied home loans.

Lender

Variable
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UNLIMITED REDRAWS
UNLIMITED REDRAWS

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

    Variable
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    100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
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    • Extra repayments + redraw services
    100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

    Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

    • No upfront or ongoing fees
    • 100% full offset account
    • Extra repayments + redraw services
    Variable
    More details
    REFINANCE ONLY
    • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
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    Variable Rate Home Loan – Refinance Only

    • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
    Variable
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    AN EASY DIGITAL APPLICATION
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    Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

    • No ongoing fees - None!
    • Unlimited additional repayments
    • Easy online application, find out if you're approved quick!
    • Redraw- Access your additional payments if you need them
    • Use the app to get loan insights to help you pay off your home loan faster
    Variable
    More details
    • Low rate home loan with added benefits, add offset for 0.10%
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    • Get a 7.0 star NatHERS rating or higher for up to 1.59% discount on your variable rate home loan T&Cs apply

    Green Home Loan (Principal and Interest)

    • Low rate home loan with added benefits, add offset for 0.10%
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    Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of August 10, 2022. View disclaimer.

    CBA's data reflects a trend seen in last week's November lending indicators data from the Australian Bureau of Statistics (ABS), which showed lending commitments rose 1.8% that month. 

    Total Australian housing loan commitments rose to $18.59 billion, with owner-occupiers the key driver of the rise, accounting for $13.35 billion of that figure.

    ABS Chief Economist Bruce Hockman said loan commitments for owner occupier housing rose 1.6%, representing a record sixth straight month of growth.

    “The value of new loan commitments for investor housing also rose in November, up 2.2 per cent, however, over the longer term this series remains down on recent peaks in activity," Mr Hockman said.

    Experts predict lending commitments to continue to rise if the Reserve Bank cuts the cash rate again in early February. 

    Commbank's data also suggests the wealth effect - the theory that people spend more as the value of their assets rises - is starting to re-emerge. 

    There are some early signs of a ‘wealth effect’ from the housing market supporting spending on motor vehicles, albeit from a very low level, as well as travel and entertainment,” said Mr Blythe.

    “A positive wealth effect could help other forms of spending as well.

    "In December, travel spending intentions continue to trend higher and entertainment spending intentions are improving at a respectable pace."

    According to CBA's results, Motor Vehicle spending intentions are up, as are intentions for entertainment and travel. 

    Intentions to spend on education and health/fitness are down, while retail spending intentions are flat. 

    This flat trend, according to CBA, remains a disappointing outcome relative to the stimulus applied via interest rate cuts, tax rebates and the turn up in dwelling prices. 




    Disclaimers

    The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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    William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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