Housing slump Australia
Retail sales slump dashes hopes for quick Australian
economic rebound
Households straining under financial pressure
That's not surprising: Australia's household
debt-to-income ratio just hit another fresh record at 194 per cent, with more
than two-thirds of it tied-up in home loans.
Home price growth is finally running out of steam,
after the regulator's efforts earlier this year prompted most banks to lift
investor and interest-only home loans rates by an average 0.5-0.75 percentage
points — Sydney prices fell (slightly) in September for the first time in 17
months.
Wages growth has continued to flatline — at 1.9 per cent
it's the lowest since the last recession.
Not only that, from July 1, thousands of retail and
hospitality workers started losing part of their penalty rates.
Wage cut could backfire
Businesses are hoping to profit from the Sunday
penalty rate cut, but their workers are also ultimately their customers.
It's impossible to know if, and how much, this might
have contributed to the fall in retail sales, but it's basic economic logic
that if you cut people's take home pay they will reduce their spending on luxuries,
which were some of the categories hardest hit in August.
On top of all that, households have just been whacked
with a 15-20 per cent rise in utility prices from July 1 on.
RBC's Su-Lin Ong points out that those bills started
hitting during the two months where retail sales began falling, while still
more people will have been hit with their first higher bill last month.
Is it any wonder Australian households aren't
spending?
(Source: Australian Broadcasting Corporation )
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