The major bank also expects residential property prices to continue to climb over the year
Australia’s property market remained red-hot at the start of the new year with home buying intentions rising in February, according to data from the Commonwealth Bank of Australia (CBA).
According to CBA’s Household Spending Intentions (HIS) report, which combines spending data with search activity from Google Trends, home buying spending intentions rose further in February, reaching their highest level since the start of the HSI in 2015.
“Both home loan applications and Google searches were up on the month and well up on February 2020 levels,” CBA said in its report, adding that it expects residential property prices to be up 8% in 2021 and 6% in 2022.
“We continue to expect the home buying market to be a key source of support for the Australian economy in 2021 – driven largely by the very low level of interest rates,” said CBA.
Meanwhile, Stephen Halmarick, chief economist at CBA, said the overall improvement in the HSI data is consistent with other signs that Australia’s economy continued to recover in the early months of 2021.
“We now expect that the Australian economy will grow by 4.4% in 2021,” said Halmarick.
He warned, however, that one risk to this outlook is the upcoming expiry of the JobKeeper program – though recent CBA research indicated that any effect from removing the measure is likely to be temporary.
“Our view is that the negative impacts of the end of JobKeeper will be short-lived and that the strength in the labour market, the large savings pool generated throughout 2020 and, as shown by the HSI, the solid momentum in spending and home buying, will see the economy transition successfully through the end of JobKeeper,” said Halmarick.