AUSTRALIANS are abandoning banks to plough their savings into real estate and the sharemarket.
As the S&P/ASX200 climbed to 4583.8 - its highest point in 18 months - new figures show a dramatic slide in the proportion of Australians believing banks are the wisest place for their savings.
Three months ago the Westpac Melbourne Institute quarterly survey showed 39 per cent of Australians regarded banks as the wisest place to park funds. This month's reading was 35 per cent.
The Reserve Bank cut interest rates twice between the two surveys, slicing the typical rate on a bonus savings account from 5 per cent to 4.5 per cent and the rate on a cash management account from 2.2 per cent to 1.7 per cent.
The grossed-up dividend yield on Australian shares has been climbing, meaning they have provided a better deal than bank deposits for some months now, according to calculations by AMP Capital's Shane Oliver.
The proportion of Australians who nominate shares as the wisest place for savings climbed from 5.5 to 6.3 per cent. The proportion nominating real estate rose from 20 to 24 per cent - the highest in seven years.
A question on whether now was a good time to buy real estate scored the most positive response in three years. ABS figures released on Monday showed new loans to investors rose 19 per cent over the past year.
"The stage is set for a solid recovery in housing," the Barclays economist Kieran Davies said. "Affordability is now about as good as it has been over the past 30 years while supply has failed to keep pace with demand.
"Loans to investors are climbing at their fastest pace since 2003 ... the attractiveness of investing in property has increased with higher rental yields and lower mortgage rates."
Analysts are split on where they think the sharemarket will be by the end of next year. The UBS analyst Abby Macnish expects the S&P/ASX200 to be 8 per cent higher, sitting about 4950 points, thanks to solid growth in earnings per share.
But Tim Rocks, the Australia strategist for Nomura, said the market was likely to be sitting about 4200 points - a fall of 8 per cent.
"Fundamentally it's still a market going down because there's no earnings growth," he said. "The second half of next year probably looks more worrying than the first half, because I think you'll get some tightening of Chinese policy through the middle of next year."
However, in the short term the market could move higher because China's first-quarter growth figures were typically strong and a resolution to the US "fiscal cliff" could make investors feel briefly more optimistic.
The figures come as the Reserve Bank governor, Glenn Stevens, told a conference in Thailand on Wednesday there were limits to central banks could do.
"Central banks can provide liquidity to shore up financial stability and they can buy time for borrowers to adjust. But they cannot, in the end, put government finances on a sustainable course. They cannot shield people from the implications of having mis-assessed their own life-time budget constraints and as a result having consumed too much."