It’s a known fact that Australians love overseas travel. And we’re willing to spend big on it (though, that said, we do love a good airfare or hotel sale). In fact, a Finder analysis of Tourism Research Australia found that Australians had saved some $60 billion a year in cancelled overseas travel because of the pandemic. Sixty billion.
So, it’s interesting then to look at what those Australians who’ve contributed to that are now spending on instead. And it turns out, it’s property.
“With all of those savings from trips not taken and experiences not had, people have more money in the bank, which they’re spending on property deposits,” says Finder home loans expert Sarah Megginson.
Generally-speaking, during the pandemic, people have been saving more. “Our research confirms that cooped up Aussies tend to have more in savings than when we were free in 2019,” Megginson says.
From April 2019 to May 2020, Aussies reported having $28,274 in savings, and from June 2020 to August 2021, that number had increased to $30,844. That’s over $2,500 per person, on average — a decent sum.
But that’s not all. We’re also benefiting from much lower home loan interest rates since the start of the pandemic. In 2019, the average home loan rate was around 4%. Now, it’s 2% — a drop that would have a significant impact on a monthly mortgage payment.
“So, when you have increased savings, no opportunities to spend your money on overseas holidays and cheaper home loans, it’s driving people to funnel their funds from holidays into real estate,” says Megginson.
“This is pretty clearly reflected in our booming property markets.”
If you’re not one of the many who has bought already property with lockdown savings, what does Megginson suggest you can do to help you do so?
“Start planning. I know so many first home buyers or would-be first home buyers who wish away the time ‘waiting’ for things. Waiting for the right time, waiting for the market to stabilise, waiting until they save up another X dollars.
“You can wait for months, or even years, and in that time, the market moves, and you could be paying more than you would have if you started earlier. There’s also so much you can do to get prepared before you start shopping for property.”
In particular, Megginson suggests using the First Home Super Saver Scheme, which is designed to help you build your home loan deposit. It allows you to save money in your super fund where it will likely earn a much greater return than it will in a savings account, and the money is taxed at just 15%, rather than your regular tax rate.
Megginson herself also launched a free e-course specifically for first home buyers.
“It’s purely for people who want to know the concrete steps they need to take to get from A (wanna be home owner, but really not sure what to do next) to B (delighted homeowner, holding the keys to their new home in their hot little hands!),” she says.
“It lays out exactly what you need to do, and the grants and discounts you have access to.”
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