Pure bubble: Households intend to buy houses and nothing else

Via CBA’s dubious household spending interntions series:

Home Buying Spending Intentions

  • The sharp uptrend in home buying intentions continues
  • Home buying intentions rose further in October and are now close to the record highs seen in H1 2017
  • Current HSI readings are consistent with an ongoing pick up in dwelling prices

Retail Spending Intentions

  • Retail spending intentions are bouncing around at present but the lift in October means a modest uptrend is in place
  • That said, that turning point is pretty modest when benchmarked against record low mortgage rates, the wealth boost from rising house prices, solid jobs growth and tax rebates

Motor Vehicles Spending Intentions

  • Motor vehicle purchase intentions remain deep in negative territory
  • And the tentative signs of a turn up in the past few months have stalled

Entertainment Spending Intentions

  • Entertainment spending intentions are rising again
  • The uptrend in this very discretionary spending component is a sign that consumers are not completely beaten down

Travel Spending Intentions

  • Beyond the dominant retail component, spending intentions in other areas like travel are a little more positive
  • Travel spending intentions are turning up, albeit from low levels
  • The trend in Australian residents holidaying overseas has slowed. The pick-up in the Travel HSI may be an indication that a lower AUD is encouraging domestic holidays instead

Education Spending Intentions

  • Education spending intentions are high and rising
  • Policy makers and economic commentators can all see the need to lift productivity growth. Rising infrastructure spending is one policy response that will help
  • But human capital is just as important as physical capital in driving productivity. So the positive signal from the Education HSI is encouraging

Health and Fitness Spending Intentions

  • Intentions to spend on Health & Fitness have levelled out
  • But the levelling is occurring at a solid rate of growth
  • The trends indicate households are willing to allocate scarce disposable income to driving health & fitness spending with little impact from the vagaries of the economic cycle

The housing bubble is now so pure that nothing else gets a dime.

David Llewellyn-Smith
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