The flow on effects of a housing slowdown

Livewire Exclusive

Livewire Markets

Sydney property prices are now off more than 10% according to Corelogic data. While painful for property owners and investors, the effects go far wider than that. Speaking at a recent event held by IRESS and Livewire, Ben Griffiths from Eley Griffiths Group looked at the wider impact.

The downturn has claimed its first victims already. Ben told the audience:

“We haven't really gone into the teeth of the slowdown, and we're already seeing companies going into receivership. I'm quietly stunned how quickly this has actually taken place”.

Watch or read Ben’s comments below, as James Marlay asks him how anxious investor should be.

Edited transcript

We should be anxious about it. We should be very anxious about it. The RBA and the government targeted specifically the recovery in the East Coast property market to get Australia moving again post the mining collapse.

So it's really underwritten the recovery in the Australian economy, and the resilience in the Australian economy. So to see that sector of the economy, which is a big employer, and responsible for substantial amounts of investment, to see that start to slow down, will have profound influences.

Most people in the room will either have their own personal experiences, or will have friends that have tried to refinance or seek mortgages, or so on, and it is damn near impossible now to either refinance or to get a mortgage; or it's very difficult if you haven't got much in the way of equity.

So it's having a profound impact immediately at that level. Which goes down to your ability to, potentially your discretionary expenditures, the wealth effect is immediately impacted.

That is already having knock-on impacts on our listed retailers who are seeing a slowdown in consumer activity, because confidence is ebbing somewhat. A lot of that can be sheeted directly back to the slowing housing sector.

We're already seeing building company collapses, which I think is extraordinary. Building companies that are in Sydney and Melbourne. One in particular that operates in Sydney, and Southern suburbs, hit the wall last week. A substantial employer. I'm surprised it's happened so early in the piece.

We haven't really gone into the teeth of the slowdown, and we're already seeing companies going into receivership. I'm quietly stunned how quickly this has actually taken place.

We've seen a bit of that during the AGM reporting, the AGM season, where we've heard first hand of housing slowdowns having impacts. So yeah, there'll be a transmission mechanism, and we're feeling it right now.

1 topic

1 contributor mentioned

Livewire Exclusive
Livewire Markets

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.


Sign In or Join Free to comment