Wages Have Not Been Keeping Up With The Cost of Living
Buying power of the average Australian is getting less and less.
This falling buying power is not often a focus of mainstream economists, or even government, despite it’s obvious effects.
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Buying Power: an often neglected, yet essential concept for economics – The Minskys
Buying power is a concept that is absent from basic economic theory, and this has major implications both for theory and for the practical issues that we face. This absence is odd because buying power is central to how the economy works. Its importance is not a new observation. Buying Power: an often neglected, yet essential concept for economics – The Minskys
So What Does Buying Power Effect?
Ultimately your clients, whether they be renters or home-buyers are restricted by the amount of disposable income they have. Rents and house prices can only go up so far before they impact on other necessary expenditure.
Your tenant or your buyer has limited resources and must budget for higher interest rates. The problem is worse, because the days of relying on wages increasing are over.
Naturally if the majority of people are unsure about their wages then they get nervous and that effects the market.
Australia home prices fall for fifth month in Feb – CoreLogic | Reuters
“Considering the tighter credit environment, the eventual prospect of higher interest rates and ongoing housing affordability constraints, we expect housing market conditions will remain sedate relative to previous years,” he said.
The inexorable rise of prices in the major cities had put homes out of the reach of many first-time buyers and had become a political hot potato.
The explosion in wealth had helped offset weakness in wages, so a sustained downturn in home prices could now act as a drag on consumer confidence and spending. (Reporting by Wayne Cole Editing by Paul Tait) Australia home prices fall for fifth month in Feb – CoreLogic | Reuters
MaxiLife Achievable cooperative Housing LTD has a number of programs that can help you address these issues. Our properties come with a minimum ten year lease fully tenanted and maintained!
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