The recent OECD Economic Survey for Australia comes in with a warning label for the government. The fact that property prices are falling could shake consumer wealth and, in consequence, consumer spending.
There’s no point explaining why this is an important area of investment that we all should pay attention.
It is, after all, what translates our investments into true and honest cash.
It’s also one of the largest mixed market economies in the world, producing a GDP of almost $1.7 trillion in 2017.
In that same year, we were second only to Switzerland as the wealthiest nation in terms of wealth per adult.
2018 marked the 27th consecutive year in which Australia’s economy had grown, recession-free. This achievement is officially the world record.
Indeed, the last recorded recession in Australia ended last century…way back in 1991.
But is it all good news?
The Dark Spots of the Australian Economy
Well, around the same time we grasped that recession-free record, Australia also achieved another record…
But this one was not the kind to celebrate.
In late 2016, Australian households became the most over-indebted households in the world.
It was also found that Sydney and Melbourne were home to the greatest amount of over-indebted households. There was a total of over 800,000 over-indebted homes across the two cities.
Sydney and Melbourne are quickly becoming some of the most expensive property markets in the world.
And yet somehow, we’ve still been able to grow…
The Lucky Country?
The Australian economy has benefitted hugely from China’s decades of economic expansion.
Chinese demand for resources led to a mining boom that peaked in mid-2012.
And then, when the mining boom collapsed, the Australian economy was thrown a supposed lifeline…
In a desperate attempt to keep GDP growth positive, the Reserve Bank of Australia — the RBA — issued ever-lower interest rates. The aim was to encourage Australians to borrow from the banks, thus keeping GDP growth up.
Technically, this method worked.
But the reality is…
Debts are rising because rates are falling. And wages aren’t increasing like they used to.
Something isn’t adding up…
Australian Economy News, as it comes…
In Markets & Money, we work to connect the dots on the Australian economy to give you a clear picture.
And part of that picture is connecting record economic growth, with record debt and record home prices.
With daily updates, we’ll make sure you know exactly where this ‘land girt by sea’ is in terms of its economy.
Read on below for our most recent views.
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I want to address another issue that could have a major impact on the Aussie economy for years to come. I’m talking about our dire political scene.
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