First-time household hopefuls set to save money in new lockdowns – if they can keep their jobs
Those looking to buy a locked house are ready to increase their savings – if they are among the workers lucky enough to keep their jobs during the latest COVID-19 outbreaks.
With Sydney residents facing an extended lockdown, the Victorians staying home an additional week, and South Australia starting its own lockdown, spending opportunities will be limited, with restaurants limited to take-out, the non-essential retail offering only click and collect, the event industry closed and travel off the cards.
In previous closings, household savings jumped as workers were less likely to spend their money, and some then jumped at the opportunity to buy a home. Many of those who lost their jobs received increased government support payments such as JobKeeper, although the stimulus offered to workers this time around fell to $ 600 per week from $ 750.
“A lot of money is going to be saved while we’re in lockdown, largely because the impact on spending in the economy is far greater than the impact on income,” Gareth Aird said, head of the Australian economy at the Commonwealth Bank. “The reason the impact on income isn’t as big is because the government pays child support.
“There are a lot of shops that are closed. The savings will increase, and they will increase quite quickly.
He expects spending to rebound quickly once the economy is able to reopen, while some of the savings also flow into mortgages or offsetting accounts.
“In terms of money invested in the housing market, it could be invested in the housing market as people are able to save more quickly for a deposit.”
But first-time homebuyers’ savings also multiplied: when they borrowed at low interest rates, new loans poured into housing, which boosted the market, he said. he declares.
As a secondary boost for savers, it’s tax time and refunds could be in store.
This includes low and middle income tax compensation, available at a value of $ 1,080 for workers earning $ 48,001 to $ 90,000 per year.
Canstar Group Chief Financial Officer Steve Mickenbecker said some employees would be waiting for a tax refund at this time of year.
“If you think you’re going to be in line for a tax refund, fill out your papers,” he said.
“Obviously, you want to do whatever you can do during this time so that you don’t come out with a lot of debt. “
He expects workers trapped at home to save money, but notes the differences from last year – there is no early retirement of $ 20,000 this time around , and income support is lower for the many people who are made redundant during virus outbreaks.
“When you have a foreclosure there is definitely less opportunity to spend money,” he said.
“If you kept your income, I would expect household savings to improve like the first time.
“I expect more people to put more money aside, provided they’ve kept their income.”
But he warned that if the Sydney lockdown continued for a very long time, there was a risk of job losses and affected households might not be able to continue saving.
AMP Capital chief economist Shane Oliver expects stranded workers who keep their jobs to save money, although perhaps not to the same extent as in March-April 2020.
“There was a lot more uncertainty last year, consumer confidence literally crashed because everything was new, the lockdowns and staying home, no one knew if JobKeeper would work, no one knew whether the lockdown would work, ”Dr Oliver said.
“This time, we have already experienced lockdowns. They seem to be working, and there is hope with vaccines too.
“People are forced to stay at home, they can’t go out and spend, they get a salary from their employer or they get a payment. All of these things are likely to see savings rates rise, but not to the same extent as last year. “
But there is a problem for anyone saving to buy their first home after the current lockdowns are over.
House prices have skyrocketed over the past year and some government incentives such as HomeBuilder have ended, although the First Home Loan Deposit Scheme is still in place.
“First-time homebuyers had a good trot in the second half of last year,” said Dr Oliver.
“The real problem is that house prices are… depending on what city you are in, somewhere between 15% and 20% higher than they were until the low last year.
“While first-time homebuyers might be able to save more, there probably won’t be a rush of first-time homebuyers to hit the market in the second half of last year,” because affordability is much worse, [and] there aren’t as many incentives as there was back then.