Freelance economist Tarric Brooker posted an interesting chart on Twitter showing a record number of used cars listed for private sale on Carsales.com.au:
As you can see, the number of listings has ramped up following the Reserve Bank of Australia’s (RBA) first interest rate hike in May last year, which has coincided with a sharp increase in the cost-of-living.
According to Brooker, “the market has added an impressive 8,000 cars since early January”.
“The canary in the coal mine continues to indicate financial stress for households hardest hit by inflation and rising rates”.
“[Some] households are in serious difficulty trying to make ends meet”.
Brooker also noted that anecdotally, he is “seeing heaps” of caravans hit Facebook Marketplace and Gumtree as inflation bites.
That said, Brooker notes that “there are two Australia’s at the moment”. And while some households are selling off excess assets like cars and caravans to make ends meet, “new and dealer used car sales remain strong”, which is reflected in the latest new car sales data:
I agree, although I think we have three Australia’s right now.
There’s the roughly one third of Australians who are tenants suffering from soaring rents.
There’s the one third of Aussie households that are mortgage holders and are being (or will be) crushed by soaring mortgage rates.
Then there’s the other one-third of households (mostly older Australians) that own their homes outright, have accumulated massive savings over the pandemic, and are now benefiting from higher interest rates on deposits.
The first two groups are likely to be the ones selling off assets to make ends meet, while the last group is more likely to be splurging on a new car.
