UPFRONT
NEWS ANALYSIS
Lockdowns a knock to confidence The nation’s lockdowns are taking their toll on new home lending and the financial comfort of Australians. While the RBA remains positive, there are still concerns about the economic recovery
THE VALUE of new home lending in Australia dropped for the first time this year in June, coinciding with the start of Sydney’s lockdown. Declining 1.6% over the month, it was driven by a 2.5% drop in owner-occupier lending – the largest fall since May 2020. Investment lending bucked the trend, with the value of new loans to investors growing for the eighth consecutive month, rising by 0.7% in June to reach $9.19bn. First home buyer purchases and loans for construction slowed over the month as incentives were wound back. Canstar group executive, financial services Steve Mickenbecker said he was expecting the softer figures to continue in line with the extension of the lockdown into July and August, foreshadowed by the subsequent lower auction prices. However, he added, “We shouldn’t over estimate the depth of June’s fall, with the month still up 84% on a year ago, when we were in the depths of the first COVID-19 lockdown. “The investment market remains resilient, though also more subdued, and investors may view the softening in prices as a buying opportunity in anticipation of the same rebound we saw from the first lockdown in 2020.”
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Financial comfort at risk The drop in new home lending comes after a positive six months of financial comfort. In the six months to June 2021, comfort was at its highest level since ME Bank first commissioned its Household Financial Comfort survey nine years ago. Spending cutbacks, rising residential property and investment markets, an improved labour market and greater household financial resilience built as a result of
said that while many households were showing significantly higher levels of comfort than before the pandemic, there were still some sections of the population who were not feeling as comfortable, like
“Investors may view the softening in prices as a buying opportunity in anticipation of the same rebound we saw from the first lockdown in 2020” Steve Mickenbecker, Canstar the pandemic have all contributed to this. The rise in financial comfort was seen even after the phasing out of government support measures like JobKeeper and despite the ongoing threat of COVID-19; however, the survey was completed before the current outbreak in NSW. ME consulting economist Jeff Oughton
single parents, casual workers and selfemployed Australians. Single parents, couples with young children, retirees and households with low incomes were also more likely to experience ‘rent stress’, according to additional research by the bank. “Despite more households saving and an overall greater comfort with cash savings,
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