Unsustainable High Housing Prices May Put Australia’s Economy “At The Precipice”

Business

Online retailers like NRL merchandise in Australia enjoy more benefits than their counterparts who prefer to maintain a physical store. Online stores avoid the need to invest in property because they only need a website and bit of storage space for the products they are offering. They do not have to hire salespersons because the task can be efficiently performed by an online customer service.

According to a warning from Industry Super Australia, a peak body for industry super funds, unsustainable high property prices may put the economy of Australia “at the precipice” of a once-in-a-century if global borrowing costs will increase by more than 150 points. In Melbourne and Sydney, the housing prices have risen to almost 7 times the average weekly earnings last year. This is more than 4 times the housing prices in 2000. While real bond yields, the proxy for lending costs, have more than halved, the highly indebted homeowners will still suffer.

ISA’s chief economist Stephen Anthony told The Australian Financial Review that in 2000, housing prices have gone ballistic to a point that it seems unsustainable. With the rapid increase in borrowing costs that banks face through the global markets, highly exposed homeowners will be in trouble. What is happening right now is like the long-term US rates which have risen this year by 40bp since Christmas.

Figures that track the ratio of Australia’s dwelling prices to earning since 1880 wherein the ratio was just over three, add concerns that there might be a possible hard landing in the hyper-charged property market. According to Mr. Anthony, housing prices in Melbourne and Sydney are facing a near one-in-five risk of price correction because the increase is faster than wages in other cities. Only a few triggers re needed to set off a correction in housing prices. This is once-in-a-lifetime event that has not happened in Melbourne since the population boom in 1880.

Because of the savings generated by online stores from rentals and staff hiring, they are able to offer NRL merchandise in Australia for a more affordable price. If you are going to shop for your favourite NRL team’s clothing, opt to do so online because it is definitely more convenient.