Australian homeowners benefitted from the robust performance of the property markets over the past years, building up significant equity that they take advantage of by renovating and investing.
According to NAB’s latest survey, around three in 10 Australians have unlocked their built-up equity to fund their renovations.
Meanwhile, more than a third of homeowners used their equity to fund their property investment, invest in shares, or add to their super contributions.
Over two in five, on the other hand, took the opportunity to get ahead on their loans by either making larger or more frequent payments or making a lump sump payment.
NAB executive for homeownership Andy Kerr said the results of the poll shows that many borrowers are currently ahead of their loans and are using the fact as an upper hand to better their financial health or improve their homes.
“Customers are wanting more security and certainty, so it is not surprising in this environment of rate increases that we are seeing Aussies paying down their mortgages even further,” he said.
“We’re fielding more enquiries today about how to use equity than we’ve ever seen — as hybrid working continues to evolve, many Aussies are taking the opportunity to build a new study or finally get that dream kitchen.”
The study found that mortgage holders aged between 18-44 are more likely to get ahead on their loan.
Meanwhile, those aged between 45-54 are more likely to use their equity to invest in their super.
Around two in three Australians aged between 18-24 prioritise paying down their loan while those between ages 25 to 44 years old are more likely to renovate.
Renovation activity surges
According to the latest Houzz survey, home renovation activity reached its highest level since 2019, with nearly half of homeowners renovating their homes in 2021.This was despite the rising costs of construction and global supply chain disruptions.
The median renovation spending also increased to $30,000 in 2021 from $21,000 in 2020.
The study found that cash from savings remains the most significant source for funding renovation projects.
Still, there was an increase in the number of homeowners financing renovation projects with credit cards.
Recent homebuyers and short-term homeowners were more likely to rely on cash from previous home sales, whereas long term homeowners had more access to cash through refinancing in 2021.
Photo by @andretaissin on Unsplash.
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