Powered by momentummedia
nestegg logo
Powered by momentummedia
nestegg logo
nestegg logo

Invest

‘Wealth effect’ to see Aussie spend climb

By Cameron Micallef · February 18 2020
Reading:
egg

Invest

‘Wealth effect’ to see Aussie spend climb

By Cameron Micallef
February 18 2020
Reading:
egg
Buying a car

‘Wealth effect’ to see Aussie spend climb

author image
By Cameron Micallef · February 18 2020
Reading:
egg
Buying a car

As housing prices continue to rise, the ‘wealth effect’ is starting with intentions to spend increasing, according to a major bank.

The latest in the Commonwealth Bank’s housing spending intention (HSI) series showed buying intention for motor vehicles turned higher, while the impact of bushfires and coronavirus has already impacted Australians' intentions to travel.

CBA chief economist Michael Blythe said the gap between consumer spending intentions and home buying intentions still persists in 2020.

“While the headline home buying intentions data eased back a little in January, the solid upward trend remains in place and there are now more signs this improvement may translate into stronger motor vehicle spending intentions – off a very low base,” he said.

The results showed buying intentions for motor vehicles have turned decisively higher, with the improving trend significant because it is the most sensitive to changes in wealth.

Advertisement
Advertisement

Consumers are also looking to spend more money on entertainment, with intentions rising, but the levelling out would again be consistent with some negative impact from the fires and virus.

However, it is not all good news for the Australian economy, with Mr Blythe highlighting HSI measures are mixed but on the soft side overall, with bushfires and coronavirus having a potential negative impact.

“There are clear signs of a turn down in education spending intentions and, especially, travel spending intentions,” he said.

Early signs of an uptrend in travel spending intentions have evaporated and a clear step down is now evident.

The retail sector is again expected to struggle over the short term, according to CommBank. 

Retail spending intentions, which are zig-zagging, remain effectively flat. There are indications that household preferences are to take the benefit of interest rate cuts and tax rebates and use it to strengthen personal balance sheets.

This could ultimately encourage more spending at the retail level, but has the consequence of long and variable lag that is underlying monetary policy. 

‘Wealth effect’ to see Aussie spend climb
Buying a car
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article
author image

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

Join the nestegg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

Join The Nest Egg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

Why we’ll keep delivering for our communities in the face of COVID-19

alex

As Australia tries to keep pace with a rapidly changing business and social landscape in the wake of COVID-19, Momentum Media is leading the way delivering essential content to our communities, writes Alex Whitlock, director of Nest Egg.

Read more

From the web

Recommended by Spike Native Network

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.