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Hola people! Be ready for a bit of a charting binge today.
Ever since we recently bought our place (read here), I’ve been monitoring the housing market ever so closely.
And I’ve been noticing a few things.
What things?
Oh y’know, about the state of our economy in general.
I’m a responsible man now OK, got a family to think of.
So first up is…
Employment
Here, let’s start with employment:
Would you look at that!
Sure, employment levels are still lower than pre-COVID, but it’s come back a fair bit hasn’t it?
A sharp “V” shaped recovery puts the trend in the right direction.
“Clap, clap, clap”.
Sentiment
It doesn’t stop there though.
Have you noticed how there are so MANY people on the streets, on the road and at the shops?
Well, that’s because for most of us – we’ve realized that this COVID thing, it can be beaten.
And with vaccinations around the corner… let’s just say we are feeling pretty good (or at least better) about things:
Income
Oh and speaking of income, for the many who have been fortunate to still have a job and able to work from home – boy o boy, our savings levels have gone through the roof.
Burn Tsss
Ouch! That’s hot.
That’s what happens when you’ve got money burning in your back pocket:
The red line is saying that wages actually fell (and is still falling).
BUT.
With the government support putting a floor on household income, our disposable income i.e. our savings, are rocketing.
Property
This has led me to look at a couple of the lead housing indicators, and it seems with an ever-increasing level of savings, many of us have started to look at investing.
We’ve seen it in the stock market, but it’s happening in the property market as well.
Just have a look at the level of finance commitments (new home loans):
Mortgages are back baby!
Interesting to note that this time, it’s led by first home buyers and owner-occupiers.
Not surprised by this to be honest, have you guys seen the amount of government incentives out there to help first home buyers right now?
From grants, to savings on stamp duty, to Homebuilder, to the deposit scheme… it’s phenomenal.
Why are first home buyers important?
Because they tend to target the lower, more affordable range of the market – as this segment heats up, it pushes price levels higher, until it reaches the next price point, and this reaches higher and so forth.
With higher prices, upgraders start thinking about… upgrading.
And before you know it, investors want a sniff as well.
~~~
Honestly though, I’ve said it time and time before… with all of these artificial government stimulus and ridiculously low interest rates, it’s no wonder that the housing market is poised to rise again.
The stock market has been running red hot ever since the March 20′ lows.
Will it be the same for property in 21′?
Sigh, time to put on the buying hat again…
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