Property prices in Australian capital cities has been falling since 2017. Many home buyers and investors have been sitting on the sidelines, waiting to see if the market has bottomed or if prices will continue to tumble. Now, increasing numbers of economists are sure that the bottom of the property market has been reached with home prices showing signs of turnaround. “The housing market has turned,” said Commonwealth Bank Chief Economist Michael Blythe yesterday. “And sooner and more aggressively than expected. “CBA’s home buying spending intentions points to further solid improvement ahead,” said Mr Blythe. The latest data from the Commonwealth Bank Household Spending Intentions (HSI) series, shows Aussies are starting to feel a lot more positive about economic conditions and loosening their purse strings as a result. The Commonwealth Bank research, which draws on actual transaction information from the bank’s own customers plus Google Trends search data, shows spending intentions are strong and moving higher in almost every sector except motor vehicles. “Spending intentions are improving in Australia, with a combination of income tax refunds and a stronger housing market leading the charge,” said Michael Blythe. “Significantly, the home buying spending intentions series has moved back into positive territory.” The home buying intentions graph from CBA (above) shows a strongly rising intention to buy into property. This intention is matched and possibly driven by improving Melbourne and Sydney house prices. Just in the last month. Auction clearance rates have improved and sales results indicate that prices are turning around. In July 2019, house values rose 0.2 per cent in Sydney and 0.1 per cent in Melbourne according to Domain. Domain is predicting the strongest growth in Sydney, Brisbane and Canberra. But other economists are more bullish. UBS’s senior economist George Tharenou believes prices are set to surge by up to 10 per cent in the next 12 months. He was previously predicting growth of 5 per cent. Home loan sales growth hit a five-year high after June and July interest rate cuts and the easing of lending stress tests said UBS in a note to investors this week. Michael Blythe predicts Australia’s housing market is going to go “from strength to strength.” “The housing market has turned sooner and more aggressively than expected. And CBA’s home buying spending intentions points to further solid improvement ahead. “The accelerated turn in home buying intentions is a positive indicator – for retail spending, consumer confidence and construction.” That sentiment is supported by the Commonwealth Bank findings on retail spending intentions – showing people are suddenly feeling a lot better about opening the bank account and spending some hard- earned. The graph above shows a two-year trend of worsening consumer sentiment seems to have ended. Aussies are also intending to spend more on entertainment, travel and education but not on motor vehicles or health and fitness. Spending intentions for motor vehicles has crashed over the last couple of years. The graph above shows that intentions are well and truly in negative territory, indicating many Aussies intend to cut back in this area. In July sentiment improved slightly but is still indicating that households don’t seem to be particularly motivated at the moment to buy a new car. That could be good news if you are looking for a good car deal or a good car loan. Stay up to date with the latest rates and property market outlook at InfoChoice. The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.