Housing, Employment and Income, it’s All Going Down

For today’s update, sorry, I don’t have good news about the Australian economy.

But then again, it’s not surprising news either. I’m talking about the latest from the Australian Bureau of Statistics.

If you’ve been paying attention, you’d know by now that your house is probably not worth as much as it was last year — especially if you own property in Sydney or Melbourne.

And now, according to the ABS, neither is your disposable income. In fact, we have hit a pre-capita recession, with income levels and employment set to slide.

What the results reveal

Felicity Emmet, from ANZ, believes we are seeing a household spending and income ‘mismatch’, with very little wage growth.

But Reserve Bank Governor Philip Lowe remains adamant that this could recover, and that the price correction we are seeing does not relate to interest rates and unemployment.

Rather, they largely lie in the inflexibility of the supply side of the housing market in response to large shifts in population growth,’ he said earlier this month.

Which, you can probably guess, isn’t slowing anytime soon.

In the three months leading up to New Years Day, we experienced a nation-wide drop in household wealth of $257.6 billion — our biggest drop since 2011.

And this isn’t just bad news for property buyers and sellers, but for builders too, as construction slams to a halt.

Correction not yet on the horizon

During the recent quarter, the ASX fell close to 10%. And overall, the Australian economy dropped by 0.2%.

The household-debt-to-income ratio rose to almost 200% — which is incompatible with the high drop of household of wealth.

While it’s impossible to predict the future, there is no telling when these figures may correct, if at all. In fact, some would say it’s well overdue.

These figures could soon turn personal for more Australians, with an expected rise in unemployment.

The ABS reports that job losses are most significant in housing, which is down more than 4% and hitting the worst since 2012. Following behind were real estate, rental services, retail and manufacturing.

We’re hoping for the best. But regardless, you’ll always be kept up to date here.

Regards,

Ryan Clarkson-Ledward,
For Money Morning

PS: Prepare for the drop with this free report: The Four Best ASX Stocks for 2019. Click here to download.


Ryan Clarkson-Ledward is one of Money Morning’s junior analysts. Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects. Ryan’s primary focus is assisting Sam Volkering with background research and insight for readers by dissecting the latest events affecting the world. Working closely with Sam, they explore the latest in small-cap and technology stocks as well as cryptocurrency opportunities. You can find Ryan’s contributing research, developments, and supporting information across several e-letters, including:


Leave a Reply

Your email address will not be published. Required fields are marked *

Money Morning Australia