A Deep Dive into Key Economic Trends

Introduction
Welcome to another edition of Wilson Weekly, where we take a deep dive into global economic trends and their
implications for the Australian market. In this week’s edition, we’re going to talk about some intriguing topics including
housing market trends, inflation, wage growth, and more.

The Housing Market: A Two-Speed Scenario
The housing market is witnessing a peculiar trend; a two-speed market is emerging. On one hand, we have experts
predicting a market crash, while on the other, predictions of soaring property prices are making headlines.

The Two-Speed Economy and its Impact
It seems that the economy is operating at two different speeds too. The narrative around the housing market is
perplexing for consumers. The question arises, which narrative should we believe? The gloom and doom or the
optimistic predictions of soaring prices?

The Housing Market: A Year in Review
The past year has seen a busy housing market. The market is now higher than where it was in the winter, and prospects
suggest it’ll be even higher over autumn next year. However, the mixed messages might be causing confusion for
investors and potential homeowners.

The GDP and the Australian Economy
Gross Domestic Product (GDP) measures the strength of the economy, and the latest data hint at a slightly weakened
economy. The GDP fell from 0.9% growth to 0.6%, indicating a slight dip in economic growth.

Consumer Spending and GDP
Interestingly, economic growth was primarily driven by consumer spending. Despite a slight fall in retail sales data, the
numbers were still significantly high.

GDP: A Backward Looking Measure
However, the GDP data is backward-looking as it pertains to the July to September period. So, we’re looking back to
some degree, but our economy is still strong.

Interest Rates and Their Impact
The Reserve Bank has been steadily increasing interest rates, aiming for around 0.75% growth per quarter. However,
the impact of these hikes seems to be minimal as of now.

Interest Rates vs. The Economy
It seems that even with rising interest rates, our economy is still booming. We’re still seeing job growth, and there’s no
sign yet that the economy is suffering due to higher interest rates.

Building Costs and Inflation
One of the significant contributors to inflation is the rising building costs. With a supply-demand issue and a lack of
trades and materials, building costs are skyrocketing.

The Issue of Rising Building Costs
When we look at the annual growth, we can see that even though it’s not at its peak, the building cost is still increasing
by 17.2%. This increase could make housing less affordable for many.

The Rental Market: Skyrocketing Rents
The rental market, too, is experiencing a drastic change. House rents are increasing at a rapid pace, making it harder
for tenants to afford a roof over their heads.

Rent Bidding: A Controversial Practice
One controversial practice that has been making headlines is rent bidding. In this practice, prospective tenants bid on
rent, turning the process of finding a rental property into an auction.

The Future of the Rental Market
The current trends indicate that the rental market will continue to face challenges in the future. With high demand and
low supply, rents are likely to continue rising.

Conclusion
In conclusion, the economic landscape is constantly changing. Despite various challenges, such as rising building costs,
high interest rates, and skyrocketing rents, the Australian economy is still strong. However, it’s crucial for both
policymakers and consumers to stay informed and adapt to these changes.