Australia housing slump will hike debt risks
Wednesday, January 23, 2019
Subject
Australia's housing market.
Significance
Construction activity fell to its lowest level for five years in December as housing prices slumped and bank lending conditions tightened. Economic growth and employment both probably declined in the fourth quarter last year.
Impacts
- Prices should bottom out this year, after a net 10-15% drop; a steeper decline is possible, especially in Sydney.
- Economic growth will be affected, with construction and retail most vulnerable to reduced private spending.
- Falling household savings and existing high debt levels will lift risks of mortgage defaults as repayment costs rise.
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