It has been almost 18 months since the initial coronavirus outbreak in Wuhan, China. Since then, the virus has spread around the world, infecting more than 186 million people and killing over 4 million (and counting).
These statistics alone suggest that there is no denying that the COVID-19 pandemic is the most significant challenge of our time.
The impact and implications of the pandemic on Australian consumer behaviour have been wide reaching and in a number of ways surprising, below are some of my observations:
1.Increased property prices.
According to CoreLogic, Australian residential property prices rose 13.5% over the past financial year, the highest annual growth rate since 2004, and WA house prices grew 1.9% last month, taking the full year increase to 9.8% which is a staggering result after years of subdued prices.
This has been the result of continued low mortgage rates, falling unemployment, elevated consumer confidence, the accumulation of savings through the COVID restrictions last year and relatively low advertised housing stock. All of which have fuelled strong demand conditions. With a shortage of rentals on the market, people do not want to risk having nowhere to live, and as a result are willing to pay a premium for properties for Fear Of Missing Out (FOMO) – which has continued to drive the prices up further.
2. Changes to savings pattern and how people spend their money.
When we went into our first ‘Lockdown’ in 2020, the average reported amount saved increased significantly, which we believe was a result of a combination of economic uncertainty, government stimulus and cash saved by working from home and not being able to socialise in a normal capacity. Since then, and with the change in consumer confidence, we have seen an increase in property purchases, car purchases, home renovations and share investment. There has been a value shift driven by a combination of FOMO and people reassessing their goals, with more of a focus on family/home and wealth creation.
3. Accelerated use of technology in business.
The pandemic has seen an accelerated use of digital channels across customers of all ages with more people working from home (especially in lockdown), and businesses needing teams and customers to remain connected.
In the mortgage broker industry, we saw major changes in terms of how customers are identified, with the introduction of identification verification tools such as ID YOU which allows non face to face identification. Further to this, some banks have introduced DocuSign for loan contracts, which means improved processing timeframes and cost reduction. We expect the knock-on affect from this to be that this will become industry standard very soon.
4. Focus on mental health in business and the impact of working from home.
The businesses that have focused on mental health, supported staff with working from home and provided flexible work conditions have thrived. In addition to improving work-life balance, working from home may also reduce companies rent costs and employee turnover and also benefit communities by lowering commuter congestion and emissions.
In terms of what is next, this will depend on many things, for example vaccination rates, global travel and interest rates. It is safe to say that the global pandemic has forever changed the way we live and it is a brave new world on the other side of this. It is, however, looking like an exciting one.