The outlook for Australia is not boom versus bust; it is bust versus blah – blah being a continuation of the anaemic, sub-trend growth seen through the past 5 years. Signs that house prices have bottomed only marginally reduce the risk of a bust. The key to the recession risk is how households adjust their saving given wealth losses, and the severity of the likely slowdown in employment growth.
Australian house prices seem to have bottomed: auction clearance rates, a reliable lead indicator of prices, troughed in late 2018 (Exhibit 1).
The full text of this article is available to MacroBusiness subscribers
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
