Property prices seem to have begun to edge back up, but there’s a lingering risk on the horizon that could make the recent lift very brief indeed.
The word being whispered in financial markets around the world is this: recession. The long run of post-GFC growth is beginning to tire, and technical indicators are hinting the US economy could soon enter recession. A recession is defined as two consecutive three-month periods where economic growth is negative. Another way of putting it is the total amount of income earned shrinks across the whole economy (the normal state of affairs is ever-rising income). A US recession would wreak havoc on the global economy. Would Australia be insulated? We have dodged the effect of US recessions in the past. They had a recession in the year 2000 and one in 2008, both of which we avoided. But back then, our economy had a bit more resilience baked in. These days we have already cut interest rates to record lows, meaning we have less space to use monetary policy. The RBA won’t be able to cut rates like it normally would in a downturn. Read more: https://www.news.com.au/finance/real-estate/buying/what-happens-to-the-property-market-in-a-recession/news-story/168d27ec930ddf0bbba5cde6fd9e262b
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