$83.5 billion in savings to go into Australian property market

Experts say real estate will take off in 2021 after record savings

An aerial view of Paradise Waters, a luxury Gold Coast suburb in Queensland, Australia. DarrenTierney/Shutterstock

Following a lengthy year hounded by the COVID-19 pandemic, experts believe that Australia’s housing market will lift off in 2021 as Australians hive up savings worth AUD110 billion (USD83.5 billion), as reported by Domain.

As the economy waves the recession goodbye and auction clearance rates gradually rise, Australians excitingly return to bricks and mortar, while some of the AUD110 billions saved by households during the extensive pandemic lockdown will predictably be invested in the property market.

Gareth Aird, Australia’s head of Australian economics at Commonwealth Bank, commented, “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.”

According to the data from the Australian Bureau of Statistics, new home loan contracts landed up at a record high in October, presenting the total value increase by 0.7 percent to AUD22.7 billion.

James Algar, principal at Mortgage Choice Dee Why, said that consumer sentiment increased as more Australians prepare to enter next year’s housing market.

More: Australian house prices to bounce back in July 2021

“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,” Algar noted.

When the case of another set of parents decided to put down an extra AUD50,000 to AUD100,000 to help their children enter the market occurred, he added, “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.”

Enthusiasm in the housing market has rumbled since August, accompanied by Westpac Melbourne Institute’s consumer survey recording a strong outpour in November from 23 to 132 percent – a seven-year high for the index.

Graham Cooke, international insights manager at Finder, remarked that the two major savings goals by Australians were towards homebuying and vacations.

Cooke said, “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.”