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Tech & Science Expert says Australia house prices are one of the biggest risks in the global economy

07:15  27 november  2019
07:15  27 november  2019 Source:   fool.com

Treasurer Josh Frydenberg is 'optimistic' soaring house prices will get the Australian economy roaring again, but experts aren't sold

  Treasurer Josh Frydenberg is 'optimistic' soaring house prices will get the Australian economy roaring again, but experts aren't sold Treasurer Josh Frydenberg has told the property industry he is "optimistic" about the market outlook, claiming that a 10% price increase could add as much as 0.5% to the nation GDP.Speaking directly to the property industry on Thursday, Josh Frydenberg emphasised the attractiveness of soaring prices.

Deutsche Bank Securities has issued its list of 20 biggest risks to the global economy , which included Australian house prices . He said that the biggest risk to the markets was the continued increase in wealth inequality, income inequality and healthcare inequality.

Deutsche Bank Securities has issued its list of 20 biggest risks to the global economy , which included Australian house prices . The post Expert says Australia house prices are one of the biggest risks in the global economy appeared first on Motley Fool Australia .

Australian House Prices© Provided by The Motley Fool, Inc Australian House Prices

According to one expert, Australian house prices are one of the biggest risks to the global market.

Deutsche Bank Securities Chief Economist Torsten Slok appeared on CNBC’s Closing Bell to talk about his 20 biggest risks to markets in 2020.

He said that the biggest risk to the markets was the continued increase in wealth inequality, income inequality and healthcare inequality. Mr Slok said “It’s an issue we think will become important in 2020 and ‘21 and investors need to have a view on if the current trend will continue or will something be done about it.”

A near-record number of cashed-up Australians are rushing back into the booming property market

  A near-record number of cashed-up Australians are rushing back into the booming property market When it comes to property, the proportion of Australians intending to buy a house has jumped back to record highs, according to the latest Commonwealth Bank (CBA) research.After a measly two-year downturn, homebuyers now appear to be back in a big way. The proportion of Australians planning on purchasing a house is back near all-time highs, propelled on by three rate cuts according to the latest Commonwealth Bank research.

He said that the biggest risk to the markets was the continued increase in wealth inequality, income inequality and healthcare inequality. But one of the other risks to the global markets according to Mr Slok is a house price crash in Australia , Canada and Sweden where houses are expensive

The risk of the global economy falling into a recession is rising as fundamentals remain poor, analysts at Citigroup "The most recent deterioration in the global outlook is due to a moderate worsening in the Expert says Australia house prices are one of the biggest risks in the global economy .

Two of the leading candidates to be the US Democratic candidates have significant policies aimed to address these issues which could result in more government spending, higher taxes and/or various ways of addressing spending. Markets would probably quite volatile if Ms Warren or Mr Sanders became the US President next year.

But one of the other risks to the global markets according to Mr Slok is a house price crash in Australia, Canada and Sweden where houses are expensive relative to incomes with high debt levels.

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Plenty of politicians, real estate agents and bankers at Commonwealth Bank of Australia (ASX: CBA) & Westpac Banking Corp (ASX: WBC) would argue that we’ve already seen the worst of it – just look at how fast house prices are recovering in Sydney and Melbourne. It’s true, but it doesn’t change that Australia’s economy is still sluggish with emergency level interest rates and very high household debt levels.

The fall of property prices and a weak dollar has wiped more than 120,000 Aussie millionaires off the face of the earth

  The fall of property prices and a weak dollar has wiped more than 120,000 Aussie millionaires off the face of the earth Australia is $US443 billion poorer this year after fallen house prices and a depreciating dollar wiped the country's wealth, according to the latest Credit Suisse report.A sustained property boom largely helped elevate the status of many of our countrymen and women to millionaires, on paper at least.

The economy of Australia is a highly developed market economy . Its GDP was estimated at A.69 trillion as of 2017. In 2018 Australia became the country with the largest median wealth per adult.

The post Expert says Australia house prices are one of the biggest risks in the global economy appeared first on Motley Fool Australia . Havana Brown on the price of fame, and her new track that was almost too hot to be released. Joel Jackson on his life in film and music, and the jungle stunt that

According to Mr Slok, the other risks to the global economy are:

“Phase one trade deal remains unsigned, continued uncertainty about what comes after phase one.

Trade war uncertainty continued to weigh on corporate capex decisions.

Ongoing slow growth in China, Europe and Japan Triggering significant US dollar appreciation.

Impeachment uncertainty & possible government shutdown.

US election uncertainty; implications for taxes, regulation and capex spending.

Antitrust, privacy and tech regulation.

Foreigners lose appetite for US credit and US Treasuries following Presidential election.

MMT-style fiscal expansion boosts growth significantly in US and/or Europe.

US government debt levels begin to matter for long rates.

Mismatch between demand and supply in T-bills, another repo rate spike.

Fed reluctant to cut rates in election year.

Credit conditions tighten with more differentiation between CCC and BBB corporate & consumer credit.

'The rotation could be enormous': Ausbil's Xiradis likes miners, banks in 2020

  'The rotation could be enormous': Ausbil's Xiradis likes miners, banks in 2020 Top fund manager Paul Xiradis thinks equity markets will continue to lift in 2020 but warns it's 'not going to be another 30 per cent year'."There are signs growth is stabilising and in some cases improving with interest rates now so low," Mr Xiradis, executive chairman and chief investment officer at $12 billion funds manager Ausbil Investment Management told TheSydney Morning Herald and The Age.

Expert says Australia house prices are one of the biggest risks in the global economy . Deutsche Bank Securities has issued its list of 20 biggest risks to the global economy , which included Australian house prices .

Part of the problem the economy is facing is that fewer shoppers are parting with their cash. There’s a myriad of things holding them back: low wage growth; higher Expert says Australia house prices are one of the biggest risks in the global economy . Motley Fool. The best Aldi specials this week.

Fallen angels: More companies falling into BBB. And out of BBB into HY.

More negative-yielding debt sends global investors on renewed hunt for yield in US credit.

Declining corporate profits means fewer dollars available for buybacks.

Shrinking global auto industry a risk for global markets & economy.

Brexit uncertainty persists.”

Foolish takeaway

I’m not convinced that Australia’s house prices are going to crash, the property market has a lot of momentum at the moment. I think it would take global interest rates to raise for something serious to happen.

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Record high household debt and a slowing economy will cause MORE people to default on their mortgage next year .
American credit ratings agency Moody's Investors Service predicts more Australians will struggle to repay their home loan in 2020. Australia's debt levels are second only to Switzerland.Australia's household-debt-to-income ratio already stands at a record 190 per cent, which is second only to Switzerland.

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