Australians were spending up big on home renovations and trades services before the $25k HomeBuilder grant was announced, new data shows.
Data from 1.8 million Australians in Zip's Weekly Spending Index for May shows a home renovation boon took place during the COVID pandemic - before the announcement of the $25k HomeBuilder grant.
At the beginning of June, the Morrison government announced it would be handing down a significant grant for new home builds and renovations, designed to reinvigorate the construction industry.
But data from May 2020 shows that home renovations and trades services saw a boon when compared to the same period last year.
“We have been particularly interested in the bolstering of spend in the past quarter on building and renovation, which is interesting in light of the recent government stimulus package," Zip co-founder Peter Gray said.
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Security installation, roofing, gardening, outdoor home improvement, home pools and spas all saw significant increases in consumer spending in May 2020, while trade services like electricians, plumbers and painters were all highly sought-after.
Spend on security and safety system installation was up +133% while spend on trades services saw a +30% lift.
Outdoor home improvement spending was up by +201% in the week Monday 18 May - Sunday 24 May, while kitchen and bath retailers enjoyed a +95% bump in the weeks before.
Similarly, CommBank's Household Spending Intentions series for May 2020 also reported a 6% lift in retail spend driven by household furnishings and equipment.
Builders and developers have already been busy fielding a renewed wave of interest from homeowners interested in the scheme, with reports of inquiries quadrupling in recent weeks.
"Fragile" signs of recovery for retailers
With restrictions easing inconsistently across industries, recovery in retail spending so far has been fragmented.
"There is a clear two-speed recovery emerging in the business economy, based on what consumers are spending their money on," Mr Gray said.
"While large shopping centres have resembled Christmas shopping sized crowds in recent weeks, pubs and bars are still limited to 50 patrons.
"This disparity of easing will continue to impact the business landscape, and particularly the small to medium-sized enterprises, who are fronting large costs to adjust their places of trade."
The hospitality industry, which bore the initial brunt of the lockdown restrictions, has been left to struggle.
"Forced to pivot significantly during May, spending in pubs & bars, cafes and restaurants remains significantly lower than seasonal averages," Mr Gray said.
"While adaptive models have helped reclaim some of the lost revenue, the gap won’t be closed until lockdown measures are completely pulled back."
While restaurants (down 19%) and cafes (down 39%) saw some resurgence in May 2020 (compared to April 2020, when they were down 38% and 53% respectively), spending at pubs and bars in May 2020 (down 74%) remained at similarly low levels to April 2020 (down 79%).
Spending on gyms and fitness centres was down -81% in May, though many remained closed during this month.
The increased spending on at-home workout equipment through March and April could further hamper the industry’s recovery, even as gyms begin to reopen again.
“What we don’t know yet is whether some of the hardest-hit industries will ever fully recover," Mr Gray said.
"We’ve seen trends in fitness and beauty that suggest that at-home equivalents may take the place of gyms and salons. We’ll have a fuller picture on these industries in the coming months as restrictions are eased.”
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
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*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may inﬂuence the cost of the loan.
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