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.
Need somewhere to store cash and earn interest? The table below features non-introductory savings accounts with some of the highest interest rates on the market.
*Data accurate as at 01 September 2020. Rates based on a savings balance of $10,000. Introductory bonus interest rate products not included. Sorted by total interest rates. Refer to providers' websites for bonus rate conditions.
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 2019. They are (in descending order): Credit Union Australia, 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.
Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.
In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
- 86 400 to halve savings account deposit limit for its maximum interest rate
- Build-to-rent: The new housing model where renters call the shots
- Should you ever buy off the plan?
- Household deposits are up during the pandemic: Are there any good interest rates?
- Gateway Bank slashes home loans by up to 124 basis points