The Commonwealth Bank’s latest household spending index shows home-buying intentions are running at a record rate indicating the rebound in house prices is likely to continue.

“Past cycles show that leading indicators like building approvals turn about three months after home buying intentions start to lift.”
Building approvals jumped 11.8 per cent in November the strongest growth in total dwelling approvals since February 2019. The RBA expects this will see a bottoming out in construction sooner rather than later.
“A bottoming in the construction cycle would remove a major growth drag on the economy, and also helps retailing,” Mr Blythe said.
However, the CBA’s retail household spending intentions index was down in December, with households remaining very cautious about spending at the retail level.
“The flat trend in the retail HSI remains a disappointing outcome relative to the stimulus applied via interest rate cuts, tax rebates and the upturn in dwelling prices,” Mr Blythe said.
“The zig-zag pattern for the retail HSI indicates that the Black Friday event brought forward spending from December into November without necessarily boosting spending overall, Mr Blythe said.
The biggest jump in spending intentions was that for new vehicles.
The Reserve Bank of Australia has frequently referenced how the wealth effect, driven by higher house prices, leads to a notable pick up in car sales.
“This wealth effect differs by type of spending. [The RBA] finds that it is highest for spending on motor vehicles and household furnishings …” RBA governor Philip Lowe said in a speech last year.