Money Low wages, high debts and housing bubble threaten the Australian economy in 2018

07:26  05 january  2018
07:26  05 january  2018 Source:   MSN

Comment: What 2018 has in store for interest rates and house prices

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bubble threaten the Australian economy in 2018 - The unemployment rate surprisingly fell in 2017, while wages continued to grow at a record low rate. Economic growth The economy is generally expected to grow around 2.75 per cent, according to several of Australia 's chief economists . (full

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a large building© Provided by ABC Business The unemployment rate surprisingly fell in 2017, while wages continued to grow at a record low rate.

Immigration picked up, giving Australia one of the highest rates of population growth in the developed world.

ABC News surveyed six of Australia's top economists to get their views on the domestic outlook for 2018.

For most of the economists surveyed, this year looks like it might be a bit better than last — but there are major risks and the economy could easily be blown off course.

The economy is generally expected to grow around 2.75 per cent, according to several of Australia's chief economists.

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l Current economic conditions and outlook – The Australian hard versus soft data debate! – House prices high – Household debt rising with household income growth subdued – Very low interest rates – High share of interest-only and investor lending for housing l Is there a housing bubble /will a

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But with a population growing at 1.6 per cent, that's not a particularly strong result.

With signs of a serious slow down in house price growth, the risk now is that a bubble has been formed which could blow.

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You are not authorised to view this resource. Why an Italian meltdown threatens the world economy .

Only one of the experts surveyed for the ABC News 2018 housing outlook forecast anything approaching a crash this year, but with household debt at extraordinarily high levels and wages growth at record lows, it's a potential powder keg.

Despite the unemployment rate falling to 5.4 per cent in 2017, and the creation of a large amount of full-time jobs, there has actually been very little change in the number of Australians out of work.

Consensus from several chief economists seems to be that there will be little improvement next year.

"We do not expect employment generation next year to repeat the stellar pace of 2017," said RBC's chief economist Su-Ling Ong.

"But modest downward pressure will remain on the unemployment rate taking it to just above 5.25 per cent by the end of 2018."

That record low wages growth and low inflation mean most economists think rates will be on hold for most of, if not all of 2018.

a store inside of a building© Provided by ABC Business

Macquarie, Citi, JPMorgan, RBC, Capital Economics say no change next year while CBA says we might see one rate rise in November next year.

It's the problem area for the Australian economy and there seems to be very little chance that workers will see decent pay rises next year.

The two biggest threats to the global economy seem to be that the US overheats, China underperforms or the Italian election throws a curve ball.

It looks like Australia's apartment building boom has further to run yet .
Australia's high-rise apartment building boom looks likes its got further to run yet. Australia's high-rise apartment building boom looks likes its got further to run yet.

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