Aussie savings hit lowest level since March 2020

By:

As millions of Australians face uncertainty about extended lockdowns and restrictions, saving levels have dropped to their lowest point since March 2020, according to new research by Finder.

Here is some finding from Finder’s Consumer Sentiment Tracker (CST) which is the largest chronological consumer survey in Australia, with over 26,400 respondents over the course of two years.

Cash savings see a dip

While many Australians started saving more money during the pandemic last year, average monthly cash savings have declined through the June quarter.

Savings

After peaking at $953 in February, the figure remained around $800 – $900, before hitting $703 in June, its lowest level since March 2020.

Graham Cooke, head of consumer research at Finder, said the trend could be indicative of increased consumer confidence following last year’s recession, leading to increased spending.

“It’s also possible the housing market boom has led more Australians to take on mortgages, leaving less money available for savings.

“However, this is a slightly disappointing result – I would have liked to see the increasing savings trend stick.

“This pandemic has demonstrated more than anything the necessity of having a financial safety net,” said Cooke.

Out of the 10 economists surveyed, 8 believe the downward trend in savings will continue.

Aussie workers not hopeful for a pay rise

The percentage of Australians expecting a pay rise has once again dropped after its significant recovery earlier this year.

Pay Rise Probability

After peaking in April where those expecting a pay rise hit 56%, the index has since dropped, reaching 42% in June.

The Wage Price Index increased by 0.6% between December 2020 and March 2021, equivalent to a 1.5% year-on-year increase.

Cooke said the drop in pay rise expectation is beaten only by the drop between March and April 2020.

“While the first drop was caused by widespread lockdowns and economic uncertainty, the reason behind this recent dip is unclear, as it happened just before the most recent COVID outbreak. Cash Money

“Some economists have the opposite view.”

David Robertson of Bendigo Bank said that tighter labour markets should help in driving wages growth up to 2%, and hopefully higher through 2022.

Tony Makin of Griffith University concurred, saying the shortage of staff in industries previously reliant on foreign students and workers on temporary visas will put upward pressure on wages in sectors such as fruit picking, hospitality, and tourism.

However, not all economists agreed.

Dale Gillham of Wealth Within said whilst there are more jobs being advertised, many areas are having trouble filling positions.

“I do not see any impact job mobility will have [on wages],” Gillham said.

More Australians are struggling with rent and mortgage payments

The number of Australians who say they struggle to pay their rent or mortgage payments is on the rise.

Mortgage Stress

After hitting a low of 23% in July 2020, this figure has been rising and peaked at 33% in May before settling at 31% in June.

Cooke said it will be interesting to see how the national stress metric behaves in the coming months, with swift lockdowns and somewhat unclear support available across the country.Rent Money

“Australia’s financial stress regarding rent and mortgage payments has previously been going in the opposite direction than one might expect.

“As COVID payments kicked in during initial lockdowns, stress went down.

“This shows that the government payments were effective in relieving some of the financial pressure resulting from the first lockdowns – it remains to be seen what steps will be needed to help during this current one,” Cooke said.

Leanne Pilkington of Laing + Simmons said that home loan stress is typically a result of buyers over-extending themselves or an unexpected change of circumstances.

“As long as due diligence is undertaken, buyers can be cautiously optimistic.”

However, some economists exhibited concern towards government schemes allowing consumers to purchase a property with as little as a 2% deposit.

Shane Oliver of AMP Capital said a 98% loan to valuation ratio implies a greater risk that the borrower will at some point face debt-servicing problems.

icon-podcast-large

Subscribe & don’t miss a single episode of Michael Yardney’s podcast

Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.

Need help listening to Michael Yardney’s podcast from your phone or tablet?

We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.

icon-email-large

Prefer to subscribe via email?

Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.


About

is a Property Strategist with an accounting background and over 30 years’ Commercial Banking experience. She is a passionate property investor who enjoys helping her clients create wealth through property investment using Metropole’s strategic approach.
Welcome to Metropole Melbourne


'Aussie savings hit lowest level since March 2020' have no comments

Be the first to comment this post!

Would you like to share your thoughts?

Your email address will not be published.
CAPTCHA Image

*


Copyright © Michael Yardney’s Property Investment Update Important Information
Content Marketing by GridConcepts