Movement restrictions amid the ongoing threat of the new COVID-19 variant have dampened the intentions of potential home buyers.
Commonwealth Bank’s Household Spending Intentions Series for July showed a sharp drop in spending intentions for most categories, particularly for housing.
However, home buying intentions are relatively stronger than during the same month last year.
The report said the medium-term improvement in this area is likely to remain in place as more buyers apply for home loans, especially due to the outlook on mortgage rates.
As demand remains relatively strong, house prices are expected to take an upward trajectory, hitting a 20% growth this year and a further 7% in the next.
This coincides with the latest new home sales figures from the Housing Industry Association (HIA).
Over the month, the turnout for new homes declined by 20.5%.
Spending intentions down across the board
CBA chief economist Stephen Halmarick said Australia's economy was on an "impressive recovery track" but recent lockdowns have dragged the overall sentiment among consumers.
"Unfortunately, the spread of the delta variant of the COVID-19 virus has seen a combination of rolling lockdowns used across much of Australia," Mr Halmarick said.
"More recent CBA credit and debit card spending data shows the ongoing impact of lockdowns, with national spending to 13 August flat relative to 2020 and up just 4% against the same week in 2019."
These findings could contribute to the expected 2.7% decline in Australian economy for the third quarter of the year.
Overall, this would soften the expected GDP growth for this year from 5% to 3.6%.
The only category that reported enthusiastic results from consumers is health and fitness.
The category includes spending intentions for doctors, hospitals, medical labs, nursing and personal care, orthopaedic and osteopaths.
Interestingly, despite the lockdowns, spending increases were seen in commercial and professional sports and club memberships and public golf courses.