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Housing downturn to weigh on activity

The housing downturn is now in full swing. While that hasn’t prevented a solid rise in consumption in Q2, we think falling wealth will be a drag on consumer spending next year. What’s more, our forecast that house prices will eventually fall 15% from their April peak would be consistent with dwelling investment falling sharply in the coming years. The upshot is that the housing downturn will bring the Australian economy close to recession next year.
Ben Udy Australia and New Zealand Economist
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House prices are in free fall CoreLogic reported that seasonally adjusted house prices in the eight capital cities fell 0.6% m/m in June, following the 0.4% drop in May. That marks the sharpest fall since 2019, and the housing downturn is only just warming up. After all, consumer confidence is consistent with annual price growth falling below -10% y/y over…

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