Home and vehicle buying intentions fall during lockdowns

Consumer intent to spend on home buying and motor vehicles fell for the first time in a year during July 2021, according to the latest Commonwealth Bank (CBA) HSI series. Declines were seen across all categories besides Health & Fitness, with decreases recorded for Retail, Entertainment, Travel and Education.

With July seeing millions of Australians plunged back into COVID-related lockdowns and restrictions, these figures are not unsurprising. Spending intentions for home buying is down from the same time in 2020, but remains higher than July 2019, which CBA considers the “last ‘normal’ year”.

CBA economists recently forecast expectations that dwelling prices may rise by as much as 20% in 2021, and a further 7% in 2022. Further, due to the current low interest rate environment, CBA predicts that despite a fall in July, home buying intentions may be likely to stay elevated. This may keep “upward pressure” on house prices, driving up the market.

And it’s a similar story for those considering buying a motor vehicle, with spending intentions down to a similar level last seen in July 2020 amidst the last COVID-19 lockdown. CBA also reported that spending on motor vehicles through its internal network is down, as are Google searches for this topic.

Prior to these current restrictions, intent to spend on motor vehicles had been strong throughout the first half of 2021. In fact, recent Australian Bureau of Statistics (ABS) figures for May found that car finance loan commitments grew by 4.7 per cent (seasonally adjusted), with the total value of new loan commitments for this month increasing to $1.296 billion.

CBA Chief Economist, Stephen Halmarick, said: “Rolling lockdowns in many states and the extended lockdown in Greater Sydney had impacted most areas of spending”

“Australia’s economic recovery from last year’s COVID restrictions was impressive, as reflected by the sectors of the economy covered by the HSI series.”

“However, this changed in July and, unfortunately, the spread of the Delta variant of the COVID-19 virus has seen a combination of rolling lockdowns used across much of Australia including an extended lockdown in Greater Sydney,” he said.

How to get a home loan or car loan during lockdowns

If you are still prioritising home buying or a motor vehicle purchase but your city is currently experiencing movement resections or lockdown, there are a few things to keep in mind

1. Digital application is available – Depending on your personal situation, there should be no reason you need to risk going in-branch to apply for a mortgage or car finance. Utilise online platforms, digital signage and video calls for important conversations to reduce your risk of catching or transmitting COVID-19.
2. Follow the rules – While test driving vehicles may be banned in many cities, there are many property auctions still allowing inspections. But there may be strict rules to follow, such as one person at the property inspection at one time. Be sure to do your research and look up any rules and restrictions before you endeavour to make your purchase.
3. Consider a broker – If you’re feeling overwhelmed with research and generally fatigued from the latest restrictions, it may be worth getting a helping hand. A mortgage broker and/or car finance broker may be able to offer you financial advice, help you with research and putting together your application, as well as potentially offer off-market interest rates and deals.

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