Australians are cashed up after saving their pennies during lockdown and will be ready to buy property in 2021, sending house prices skyward.
Economic estimates put the amount Australians saved during pandemic lockdowns at around $110 billion and plenty of that is likely to find its way into the property market.
Commonwealth Bank’s Gareth Aird said growing consumer confidence, ongoing low interest rates and cashed-up households were driving up house prices.
“You’ve got a few forces that are all pointing to higher house prices,” he told Domain.
“Some of the forward-looking indicators like lending have increased quite quickly in the past four months.”
“The price people are willing to pay for an asset is going up and property is no exception, you’re either renting or you’re an owner-occupier and if the borrowing costs come down … then it’s a very natural response.”
Mortgage Choice’s James Algar is based in Sydney and told Domain he agreed consumer sentiment was on the up.
“Just in the past week, I’ve had two scenarios where the parents have turned around to the kids and said we’ll help you buy because you need to buy now,” Mr Algar said.
“That’s a real sign of not just first-home buyers and buyers being confident but also the older generation where the money is coming from.”
So where will all the money go that has been squirrelled away by Aussies during the lockdowns of 2020? Finder International insights manager said it would mainly go on two things – holidays and property.
“They are the two things people are saving for the most in Australia,” Mr Cooke told Domain.
“With interest rates being so low, the bottom rung of the ladder has come down a little. It will give Australians the opportunity to buy their first home this summer.”