And while comparisons are skewed by last year’s COVID lockdowns,the yearly rise is still 16 per cent ahead of the pre-pandemic trend. The numbers point to consumers still addicted to spending and the Reserve Bank may interpret the latest data as requiring further interest rate rehabilitation.
The robust spending figures coincide with Morgan Stanley’s move to up the ante on its forecast fall in Australian housing prices. It now expects a 20 per cent tumble from peak to trough.
Morgan Stanley is now at the more pessimistic end of the market in terms of house prices,others are predicting falls in the range of 15 per cent.
Either figure would represent the biggest fall in house prices in four decades. A 20 per cent drop would dwarf the 10 per cent decline experienced in 2017 to 2019 - which was the second largest since the early 1980s.
The conventional economic script says that in a falling housing market we are expected to feel a negative wealth effect. In other words,we feel poorer because our biggest asset (for most) is worth less. In turn this is supposed to curb our spending.
So far,that doesn’t seem to be the case in Australia. Additionally,one of the strongest areas of retail spending has been in household goods.