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Shaky Housing Adds $7 Trillion Hazard to Australia’s Economy

  • Economists diverge on how property downturn will hit consumers
  • Most are in RBA camp of cautious optimism; some more worried
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Housing Markets Are Bubbling All Over the World
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Economists agree Australia’s housing prices are about to sink. What they’re not so aligned on is just how much a slide in the country’s A$10 trillion ($6.9 trillion) property market will drag the economy down with it.

With interest rates rising and inflation yet to peak, few expect an economy that’s 60% fueled by consumption to escape unscathed from a housing correction. While some economists are talking of recession, others expect Australia’s consumers to withstand the reversal of a wealth effect that accelerated during the pandemic.