Property only getting hotter, says Commonwealth Bank

Even more Australians are set to pile into the sizzling property market, thanks to record low interest rates and rebound in the economy.

An auction at Ermington in Sydney over the weekend. .

More Australians are set to pile into the sizzling property market, thanks to record low interest rates and rebound in the economy.

Home buying intentions continued to climb last month, hitting their highest level since 2015, with both mortgage applications and Google searches up on January and well up on February 2020 levels, according to a new report by financial giant Commonwealth Bank.

CBA chief economist Stephen Halmarick said the overall improvement in the bank’s Household Spending Intensions data was consistent with other signs that the economy continued to recover in the early months of 2021.

“Fourth quarter data showed that economic growth improved further at the end of 2020, with a ‘V-shaped’ recovery and we now expect that the Australian economy will rise by 4.4 per cent this year,” he said.

CBA says the home buying market will be a key source of support for the economy this year, driven primarily by low interest rates.

Residential property prices are expected to rise by 8 per cent this year and by 6 per cent in 2022, with house prices forecast to be 9 per cent higher this year.

Mr Halmarick warned that the end of the federal government’s JobKeeper program in a few weeks may hurt the outlook, though recent CBA research suggested any effect from removing the labour market support measure was 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,” he said.

CBA’s HSI series is based on the bank’s spending data with Google Trends publicly available search activity. Last month, it hit its highest level since its start in 2015.

The latest CBA report comes just a few weeks after property research group CoreLogic reported that housing prices jumped at the fastest rate in 17 years in February, led by a recovery from the coronavirus crisis and low interest rates.

Home values surged 2.1 per cent in February in the largest monthly change since Aug­ust 2003 in the ­national home value index issued by CoreLogic.