Daily BulletinDaily Bulletin

Real Estate

  • Written by News Company



Australia property markets have been on shaky ground lately and this in turn is having a ripple effect on consumer demand; a worrying sign for retailers especially as the peak Christmas sales period approaches.

While the impact of falling property rates have been somewhat constrained, without largely affecting other sectors, household spending is estimated to come down as we move into 2019.

Spring sales season which is considered to be the busiest time of year for sales, saw clearance rates dipping below 50%, alarming retailers. Melbourne joined the ranks of Perth and Sydney in sales weakness. A direct correlation between house sales and household products like sofas, homewares and kitchenware has been observed. Paul from Canvas Factory, an ecommerce retailer reported that despite the market uncertainty, things were still looking promising for the Christmas period.

A number of factors seem to be coagulating and threatening to spill into broader economy. These include weak sentiment, deflation, slowing population growth, flat wages and high household debt, all of which directly affect consumer spending and the banking systems.

While government has to tried some counter measures to attract first time homebuyers with incentives and better affordability, no tangible results have been seen thus far. 

Research though indicates that the economy is unlikely to slip back into a recession, thanks in large parts to strong global economy and increased public spending on a federal and state levels.

So the question on everybody's lips is how much of an impact will the deteriorating housing market have on the broader economy and whether it will be catalyst for larger decline.

Australia - In the Red Zone

Amongst all the developed economies, Australia seems to be most at risk due to sky high household debt, slow credit growth and declining property prices.

Mortgage lending, flat wages and macroeconomic/fiscal policies have led Australia on a dangerous path of topping the poll among G10 economies on the nations most at risk of economic downturn.

A report by Morgan Stanley warns that household debt among G10 economies has jumped from 98 per cent to 160 per cent in the past 20 years.  The Housing market though has slipped another 0.6 per cent in October, culminating a nearly 5 per cent slide for the year. The market sentiment and auction clearance rates in Melbourne and Sydney continue to fall sharply, while Brisbane seems to be toughest of the lot with flat prices.

While affordability continues to be a problem, despite prices cooling off, outlook remains pessimistic due to oversupply, tight credit and political situation of the present government. Sellers seem to be taking all the pressure right now, and its starting to show.

A Forecast of decline

Numerous reports predict a peak to crest decline of national housing prices to be anywhere between 10-15%. Some pundits are even forecasting a 20 percent fall.

Sentiment among investors has slumped to a record low and very few believe it to be a wise investment. A mildly positive statistic refers to growth of number of households with multiple properties (a rise to nearly 1.5 million).

Regardless, retail spending has been continuously weak lately, largely attributed to falling housing prices and weak wages.

Here's how the Victoria-NSW border closure will work – and how residents might be affected

arrow_forward

Why Weiner Mobile Estates?

arrow_forward

The Conversation
INTERWEBS DIGITAL AGENCY

Politics

Prime Minister Interview with Ben Fordham, 2GB

FORDHAM: Thank you very much for talking to us. I know it's a difficult day for all of those Qantas workers. Look, they want to know in the short term, are you going to extend JobKeeper?   PRI...

Scott Morrison - avatar Scott Morrison

Prime Minister Scott Morrison interview with Neil Mitchell

NEIL MITCHELL: Prime minister, good morning.    PRIME MINISTER: Good morning, how are you?   MICHELL: I’m okay, a bit to get to I apologise, we haven't spoken for a while and I want to get t...

Scott Morrison - avatar Scott Morrison

Prime Minister Interview with Ben Fordham

PRIME MINISTER: I've always found that this issue on funerals has been the hardest decision that was taken and the most heartbreaking and of all the letters and, you know, there's been over 100...

Scott Morrison - avatar Scott Morrison

Business News

SEO In A Time of COVID-19: A Life-Saver

The coronavirus pandemic has brought about a lot of uncertainty for everyone across the world. It has had one of the most devastating impacts on the day-to-day lives of many including business o...

a Guest Writer - avatar a Guest Writer

5 Ways Risk Management Software Can Help Your Business

No business is averse to risks. Nobody can predict the future or even plan what direction a business is going to take with 100% accuracy. For this reason, to avoid issues or minimise risks, some for...

News Company - avatar News Company

5 Ways To Deal With Unemployment and Get Back Into the Workforce

Being unemployed has a number of challenges and they’re not all financial. It can affect you psychologically and sometimes it can be difficult to dig your way out of a rut when you don’t have a job ...

News Company - avatar News Company



News Company Media Core

Content & Technology Connecting Global Audiences

More Information - Less Opinion