Mortgage interest spirals
Property interest payable on dwellings increased from $45 billion to $91 billion in the 2023 financial year, more than doubling in recording an increase of +102 per cent.
Good news for banks, I guess but will most likely be crippling for household expenditure, consumption, and retailers over the next year...
There were some strong lifts in incomes in the ACT (always...of course!), Western Australia, Queensland, and New South Wales, all of which recorded increases in the range of 6 to 7 per cent over the financial year past.
However, increases in disposable incomes were only far more modest, largely due to inflation.
Such an enormous increase in mortgage interest payments in such a short space of time will almost inevitably stall the economy over the next year.
Concerningly, the dwelling construction cycle has apparently also been short-circuited, suggesting a dramatic shortage of housing over the next few years.
Lending conditions are ridiculously tight, so something will need to change here at some point, with the current settings creating severe disruption in some parts of the country, with unrest potentially not too far behind.
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UK Home Office estimates to be released this week are expected to show estimated net migration hitting around +700,000 this year, eclipsing the record +606,000 set in 2022.
So it won't just be Australia tackling a housing shortage...in fact, this seems to be a global issue, with much of the EuroZone now facing similar challenges.
Speaking of housing shortage countries, Canada saw its inflation rate decelerate from 3.8 per cent to just 3.1 per cent in October.
Great to see Canada winning its inflation race.
Australia next...
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