Australians are being forced to push back their financial goals and major life events, as COVID-19 impinges on consumer confidence and money habits, new research showed.
Almost a quarter of prospective home buyers had no choice but to put their property purchase plans on ice due to the coronavirus-induced recession, an AMP-commissioned survey of more than 1,000 adults indicated.
About one in five had to delay their purchase of an investment property.
This is despite record-low interest rates, as well as housing prices in the combined capitals dropping by 1.5 per cent in the past three months, the latest CoreLogic data showed.
However, those that are going ahead with their property purchases are rushing to buy in regional markets, as many professionals now working remotely no longer have constraints to live close to their inner city offices.
Nearly 30 per cent of AMP survey respondents say they are holding off on car purchases, and the same proportion are being forced to delay major life events, such as weddings.
Sixty per cent are pushing back their overseas holidays, as international border restrictions remain closed in Australia.
Additionally, 20 per cent of Australians are postponing planned career changes in favour of stability due to the pandemic.
Aussies make cut-backs on spending
As many rethink their life priorities and financial goals, two thirds of Australians say COVID-19 has affected their personal finances, the research found. Almost half do not expect progress on their financial goals to continue as planned pre-pandemic for at least another three months.
Nearly 40 per cent indicated they have reduced spending due to the economic environment, as the recession weighs down on consumer sentiment.
Retail turnover declined by 4.2 per cent in August amid the recession, the latest figures from the Australian Bureau of Statistics (ABS) showed. Even when excluding Victoria, retail trade across the rest of the country decrease by 1.5 per cent in the same period.
AMP Bank’s director of retail solutions & direct distribution Michael Christofides said COVID-19 has made many Australians become more financially savvy, after riding out possibly the worst stages of the pandemic.
“With talks of the recession and consumer confidence down, it’s clear that many Australians have been impacted by COVID-19, including having to hold off on making significant financial decisions from retirement to travel to buying property,” he said.
“We’re seeing Australians being more prudent with their saving and spending decisions, partially due to lockdown restrictions but also relating to a desire to be prepared for any future rainy days.
“Now more than ever, Australians are conscious of the importance of saving and preparing for the unpredictable.”
Uptick in savings as Australians plan ahead
Aside from pinching their pennies, more than a fifth of Australians have also made a conscious effort to save more, while also directing funds to investments, the AMP research found.
Forty-four per cent of poll participants indicated they have seen a boost in their savings, as many people stay at home due to COVID-19, making it harder for them to splash their cash.
Aligning with the survey findings, the average household wealth jumped by 1.4 per cent, or $5,881, per person to more than $430,000, according to ABS data, despite several major banks, including CBA and NAB, cutting savings rates recently.
This is tipped to continue, with savings levels expected to stay high over the next three years, the latest IBISWorld research suggested.
Meanwhile, 39 per cent said the pandemic has acted as a catalyst to sort out their personal finances and become more financially prepared, while 45 per cent are hopeful that their finances will improve post-COVID.
Mr Christofides said the pandemic has encouraged many Australians to put their personal finances under the microscope.
“There’s no doubt that COVID-19 has brought with it a number of challenges for Aussies but the challenging climate has given some the opportunity to take a step back and re-evaluate their personal finance journeys,” he said.
“Compared to earlier in 2020, there’s a sense that Aussies are taking this time to reset their financial goals and adopt more proactive financial behaviours both in relation to saving and discretionary spending.