Retail therapy is back in fashion as household spending rises

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The busiest quarter for real estate in eight years, shoes, food and entertainment dominate spending, and 365,000 workers are leaving 9-5 to start new businesses.

Here are five things you may have missed this week.

Shoes, food and fun – we spend more

The latest household spending data from the Australian Bureau of Statistics (ABS) shows we’re not holding back when it comes to enjoying retail therapy.

February saw a 7.7% rise in overall household spending. But the bulk of the money went to clothing and footwear (+20%), leisure (+18%) and cafes and restaurants (+16%).

Alcohol and cigarettes was one of the few areas where we closed our wallets, with spending down 10% for the month.

We are far from the start of the pandemic when household spending plunged 24% in a few days between March and April 2020.

Jacqui Vitas, head of macroeconomic statistics at ABS, said fewer COVID-19 cases in February, alongside the further easing of restrictions during the month, were behind the increase in spending in leisure, hospitality and retail locations.

A record number of homes put up for sale

Good news for home buyers. A PropTrack report from REA Group, the name of property sales site realestate.com.au, says the first quarter of 2022 had the busiest start to the year since 2014.

New property listings in capitals across the country rose 16.2% in March, with all capitals recording double-digit growth in new listings month-on-month.

The volume of new homes coming onto the market was highest in Canberra (up 21.6%) and Adelaide (19.3%).

Darwin lagged behind, with new listings up 12.3%.

PropTrack economist Angus Moore said “the real estate market started 2022 strong, with a strong pace of new listings hitting an eight-year high.”

Moore thinks the combination of easing buyer demand and high levels of new supply is giving homebuyers more choice while making it easier to compete in the marketplace.

New entrepreneurs open for business

Thousands of Australians went from employee to business owner in financial year 2021, according to new research from Finder.

When the lockdowns began in March 2020, a Finder survey found only one in eight workers felt unsafe about their jobs.

In April 2020, that number rose to one in four, or the equivalent of 3.2 million workers.

Job security fears may have fueled 365,480 new business launches last year. A figure which, according to the ABS, is the highest since data collection began in 2013.

“Many Australians dream of taking the lead, and the restrictions of recent years and working from home may have prompted some people to take the plunge,” says Finder personal finance expert Kate Browne.

Budding entrepreneurs don’t have to go it alone. Support is available through the federal government’s New Business Assistance.

It provides training and mentoring to small businesses as well as the New Business Investment Scheme Allowance – equal to jobseeker payments for up to 39 weeks. Be sure to check the eligibility requirements.

Super funds show strong results

It’s been a positive year for the country’s super funds, with data from SuperRatings showing that balanced funds posted year-on-year gains of 7.6% through March 2022. Growth-oriented funds delivered returns means 9.2%.

That’s above the 7.2% average annual return of balanced funds since the introduction of the employer-paid super mandatory in 1992.

“We are currently on track to end fiscal 2022 in positive territory, based on the performance of investment markets during the June quarter,” SuperRatings’ Kirby Rappel said.

That said, he expects fund performance to be “moderate” compared to the blistering 17.8% returns on supers seen in 2020/21.

What is particularly remarkable is that super balanced funds have only posted losses for four of the 32 years since the launch of the super guarantee.

Commercial the property shines

Mention the word “property” and most of us think of residential housing.

But a new report from appraisers Herron Todd White shows that commercial property (think warehouses, offices and stores) can also offer healthy returns.

The report says some areas have seen capital gains of up to 50% on commercial properties sold in the past year.

According to Raine & Horne, demand for commercial property is being fueled by small businesses taking advantage of low interest rates to buy their premises – a strategy it says can be cheaper than renting.

This merges with ABS data showing that business lending for the purchase of properties has jumped 137% since a low in July 2020, led mainly by small and medium-sized businesses.

Interest rates on commercial real estate loans tend to be higher than home loans. Adelaide Bank offers a rate of 3.89% but borrowers need a down payment of 35%.

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