There’s a risk on the horizon that could have dire consequences from Australia’s already struggling property markets. Here’s what could happen.
. The state of the household sector is fragile, and there’s a valid question over whether people would keep spending as a global recession looms.To answer that we need to turn back the pages of history and look at the early 1990s.Our last recession was in 1991. Picture: SuppliedNationwide, they had been flat or falling even before the start of the recession. The flat spot continued for a while, but even before the recession ended, house prices began to bend back up.
The idea that house prices can move very differently in different parts of the country is not an unfamiliar one in Western Australia, where house prices sank dramatically as the mining boom receded., even as the mainland press groans about house price doom and gloom. The kind of recession we have will probably determine where is hit hardest. If it is a financial crisis, Sydney can be expected to suffer. If the price of resources collapses, Western Australia and Queensland will suffer.
“One scenario could be a big lift in the WA economy as the US-China trade war forces China to buy more mining and agriculture from Australia as opposed to the US,” Ms Consibee said in a note to clients. “Melbourne and Sydney are more sensitive to multinationals cutting jobs and may be hit harder. If this is the case, it could look like a post-GFC type impact.”
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