3 implications of the hot property market

Livewire Exclusive

Livewire Markets

Livewire caught up with Giselle Roux, CIO at Escala Partners, to discuss the implications of elevated housing valuations on the wider economy. These include the effect on the retail sector through reduced levels of discretionary income, as well as two other key areas. 

 

 "It’s a fairly conservative and dull picture, possibly a bit of a dangerous picture for the domestic outlook and companies that are associated with levels of domestic demand." 
  • Rent as a proportion of income is high. Add on non-discretionary spending, such as healthcare, utilites, insurance etc, and leaves much less of a pool of discretionary.
  • Retail sector is feeling this. Companies may seem cheap, but the outlook is not great until there is some income growth.
  • Housing is not a productive asset, and allocation into the sector rather than corporate activity, can part-explain our low productivity growth.
  • Consolidated of housing wealth leads to wider inequality (High Gini Coefficient) which is unhelpful for growth. 

 

 


Livewire Exclusive brings you exclusive content from a wide range of leading fund managers and investment professionals.

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.