July 19, 2024

Vagmare.com

The Intersection of Information and Insight

Australian economic and financial markets update

2 min read

Key takeaways

If a picture paints a thousand words, then this collection of charts should do a pretty good job of painting the landscape as it affects our economy and our property markets.

Australia’s economy doesn’t operate in isolation, so it’s important to keep track of how the economies of our major trading partners are performing.

While only a year ago many economists suggested a number of countries could fall into recession in 2023, this just didn’t occur and in fact Australia’s economy is still growing too strongly for the RBA’s liking causing the most recent rate hike in November.

Inflation around the world seems to have peaked and this should make this easier for the RBA to get inflation under control in Australia but it will take longer than they hoped.

So far the impact of the Reserve Bank’s 13 interest rate rises has barely begun to be felt as we’re still spending boldly.

While rising interest rates and inflation have eaten away at the average household budget, in general Aussies have significantly more equity in their homes than they had three years ago and started this rising interest rate cycle with considerably more savings stashed in their savings or offset accounts than they had at the beginning the pandemic, three years ago.

Australia’s residential property market is valued at over $10 trillion, yet only $2.1 trillion worth of debt is against this large asset base. In fact 50% of homeowners don’t have a mortgage against their homes.

Currently, Australia has a shortfall of housing, and the cost of residential construction has risen substantially in the last few years. This means that most developments on the drawing board are not currently financially viable to get out of the ground.

Consumer confidence remains at historically low levels and is likely to fall further after the latest rate rise.

Australia’s business sector is doing well, but the near-term business outlook is one of softening consumption and investment growth, tightening government expenditures, and high debt costs.

The unemployment rate is still historically low, at 3.7%, meaning Australians can feel secure about their financial futures.

The labour force participation rate is an estimate of an economy’s active workforce. The participation rate has increased over the last few years, and there are currently over 400,000 jobs advertised, but nobody to fill them.

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