Via Livewiremarkets comes Philip Hofflin at Lazard:
The critical financial issue in the Australian economy at present is clearly the possible economic effect of the decline in home prices. We have been warning about high home prices and household debt since 2015, but have always known that the timing of any downturn would be difficult, if not impossible, to predict. However, it is now clear that home prices are falling nationally, and in Sydney in particular, and this raises the question of the likely economic consequences and their timing.
We have examined historical examples as a guide to what to expect. Our view is that investors shouldn’t take comfort from the only modest magnitude of the residential price decline, as the worst of the economic damage could be front loaded and be occurring before the official ‘rear view’ economic data is published.
