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Chinese real estate speculators have disappeared? The 27-year "economic myth" of this country will be dashed
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Last September, when the first two quarters of economic data released in Australia, the country's media was still a sound of cheering, when the country's GDP growth rate up to 3.4 percent, the media have to "show off" this achievement, and proudly called "Australia GDP27年no recession! "
But such eye-catching data has only lasted for less than half a year. On March 6, the Australian Bureau of Statistics released economic data for the fourth quarter of last year, showing that Australia's economic growth last year was much lower than expected, with an annual growth rate of only 2.3%.
The main reason for the sharp downturn in the Australian economy is the Australian property market that has been raging for years.
27 years of "economic myth" or end
The Australian economy can be described as "outstanding" in developed countries. From 1991 to 2018, the Australian economy has been in a state of growth and one of the longest growth periods in developed countries, mainly due to the country's high population growth rate and rich mineral resources.
But now, this "economic myth" is threatened by the end.
On March 6, the Australian Bureau of Statistics released economic data for the fourth quarter of 2018, showing that its economic growth rate was only 0.2%, and the annual GDP growth rate was lowered to 2.3%, far lower than the Australian Federal Reserve Bank. 2.8% of optimistic expectations.
Image source: Australian Bureau of Statistics
Fourth quarter, GDP per capita growth rate of Australia -0.2% after -0.1% in the third quarter. This is the first time since 2006 that the country’s per capita GDP has experienced negative growth for two consecutive quarters.
It is worth noting that such performance is far from the previous predictions of relevant Australian authorities. In February 2018, the Australian Trade and Investment Commission issued a report predicting that Australia's economic growth rate will be the highest among the major developed economies in the next five years. The Australian Central Bank also issued a statement in July last year, expecting Australia's economic growth rate to be slightly above 3% in 2018 and 2019.
Although the annual economic growth rate of 2.3% is not low in developed countries, in reality, the hidden dangers of the Australian economy may be more serious than the slowdown in GDP growth alone.
Why is this? Because the long-distance troika of the Australian economy – real estate and household consumption – is not enough.
According to the Australian Bureau of Statistics, in the fourth quarter of 2018, Australian household consumption growth was only 0.4%, reflecting a slowdown in wage growth and a small increase in household savings. The decline in house prices suppressed consumer willingness and housing investment fell by 3.4%.
ANZ's senior economist Felicity Emmett said the data was disappointing, especially as household consumption continued to weaken, with car sales, household goods and utilities spending being the main causes.
According to the Financial Times, some economists warned that the downturn in the real estate market may end Australia's growth period.
The property market encounters "cold wave"
In Sydney, Australia's largest city, housing prices have experienced nearly 50 years of growth, one of the longest bull markets in the world, but since last year, Sydney's property market has entered an inflection point, and its house prices have fallen faster than many people. Expected.
According to data released by the Australian Real Estate Group (REA) in January this year, Sydney house prices fell by 5.9% in 2018, and may fall another 5% in the first half of this year.
In the past year, the median price of Sydney's single-family homes has fallen by 6.5%, and the price of apartments has fallen by 4.9%.
House prices along the Sydney Metro are almost all falling (Source: REA official website)
In Melbourne, house prices fell by 1.5% in the past year. According to CoreLogic, Sydney’s house prices fell 1.8% in December, and the other eight major cities, including Melbourne, fell 1.3% on average, the largest drop since 1983.
This is related to the massive withdrawal of Chinese buyers from the Australian market. According to Bloomberg Global Finance, the core market for Sydney real estate agent Adam Wong, the northern part of the Sydney Harbour Bridge, and one-third of the Chinese suburbs of Chatswood, he Sales began to decline, at least half of the peak. This is also reflected in the recent data released by the Australian government: Australia's home purchases have fallen sharply, and the Chinese are no longer the largest overseas buyers.
Australia has always been one of the popular destinations for Chinese overseas buyers and immigrants. Their interest in apartments and beachfront luxury has made Sydney's property market hot. In the five years to mid-2017, Sydney's house prices have soared by 75%. But as Chinese buyers gradually leave, Sydney's housing prices are not able to sustain the previous boom. Wong estimates that Chinese departures may have contributed about a quarter of the decline in Chatswood prices.
In recent years, China has been Australia's largest source of foreign investment, but according to the latest annual report released by the Australian Foreign Investment Review Board last month, China's total investment in Australia fell by 40% year-on-year, while US investment in Australia increased. This result also prompted the United States to surpass China for the first time in five years and become Australia's largest source of foreign investment.
Residents' income growth is weak
In addition to the gradual departure of overseas buyers, the enthusiasm of Australian residents to gradually reduce their home ownership, mainly due to slow income growth and high household debt levels.
The Australian Institute of Household Income and Labor Dynamics (HILDA) report, published by the Melbourne Institute in August 2018, shows that there has been no significant increase in the actual after-tax income of typical Australian households since 2009.
The report shows that after inflation adjustments, Australians’ real income between 2015 and 2016 rose by only 1.8%, compared with 29% in 2003-2009.
Professor Roger Wilkins, one of the authors of the report, said that the income of high-income people did increase, but in the other 99% of low-income people, the overall income distribution changed little.
Australia's household debt level is also quite high, which also attracted the Australian media's self-deprecation. ABC Chinese website last June article sighed: "Australia may not be able to qualify for the World Cup finals, but on the issue of household debt, We are a good player in the global finals."
As of June last year, Australia’s household debt accounted for 121.3% of its GDP. The credit card debts of Australians are also very high. According to the Daily Mail, in 2018, the annual growth rate of credit card debts of Australians reached a new high in nearly eight years. Every Australian has an average of more than 3,000 Australian dollars in credit card debt.
According to the Australian Securities and Investments Commission, 1 in 6 consumers in the country are in the “credit card debt trap” and 18.5% are facing credit card debt pressure.
Editor in charge: Guo Yanyan RF12556
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