Family home funds consumer splurge: Poll

Almost one in five Australian homeowners are tapping into the equity on their home to splurge on cars, holidays and consumer goods, the results of an online poll conducted by consumer infomediary suggest.

Almost one in ten home-owners have used home equity to fund a new car alone, the August 2004 survey indicates.

In the absence of hard data on the subject, there has been much debate over the extent of home equity withdrawal in Australia since the beginning of the recent housing boom – and what it is being spent on.

Almost 40 per cent of the 200 poll respondents, or two in every five, have tapped into the equity in their home to finance consumer purchases or further investment. And this group does not include those who may have used home equity to finance another property investment, also believed to be a significant number.

Around 18 per cent have borrowed to spend on current consumption. Half this group, 9 per cent, have borrowed against their home to fund the purchase of a car alone. Around 13 per cent have invested in shares or other financial market investments while 9 per cent have channelled borrowings into home renovations.

The survey results suggest that home equity withdrawal may be a significant factor behind the long run of strong retail sales figures and record new motor vehicle sales over the last two years. With the family home one of the major wealth-building assets used by Australians, the rate of home equity run-down is causing concern over our ability to fund retirement.

Have you accessed some of the equity in your home
for uses other than purchasing property?
No 60.7%
Yes, shares or other
Yes, a car 9.2%
Yes, home renovations 8.7%
Yes, another purpose 5.6%
Yes, household goods 1.5%
Yes, holiday 1.5%