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Food, water, and shelter are the three most basic needs for any person. Yet around the world it is becoming increasingly difficult for people to obtain a house of their own. The board is being stacked against many of us, and Australia's crisis exemplifies many of the issues that have made housing so deeply unaffordable for many. The housing market is so key to Australia that it could bring the Australian economy down with it. Is there a recession coming in Australia?
Guests:
Graham Cooke
Insights manager at finder.com.au, driving consumer focused research
Alex Saunders
Founder and presenter of Nugget News
Expert in cryptocurrency and all things economic in Australia
Peter Tinley
Minister for Housing in the Australian state of Western Australia
Jakob Madsen
Professor of Macroeconomics at the University of Western Australia
Global leader in financial analysis, who predicted the crash of 2001 and the 2008 GFC
Part 1: Shaky Ground? (01:25)
Why have interest rates been cut again in Australia against the advice of hundreds of economists?
We look into the nature of foreign investment and development in Australia, and the impact that has had on housing prices and the real estate bubble.
We look at Australian household economic well-being. The Australian household debt to income ratio is one of the highest in the world and wage growth is stagnating; do these precipitate a recession?
We look at the specific indicators that can be used to predict recession; car sales; debt defaulting; the dependence on interest on debt repayment for many investors. These indicators are all signalling toward a recession sometime soon, are they reliable and can they be arrested?
Part 2: Commissions and Corruptions (14:30)
We analyse Australia's lack of economic complexity due to its overreliance on housing and mining.
There was an Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. We look at the advice coming out of that commission, and the corruption that had been found in the housing market.
We also take a look at the weapons that the Australian Government and Reserve Bank of Australia have to tackle wealth gaps, income inequality and a recession if one comes about. We compare these to the strategies used in the United States.
Finally we look at the consequences of a bubble pop or a recession, and Alex's views on the potential ways that some of these issues could be tackled.
Part 3: From Inside the House (28:57)
Peter Tinley gives us a view inside at what the Governments of Australia are doing to tackle economic issues in Australia.
He outlines for us what governments have taken away from the Royal Commission, and evaluate strategies proposed or in use for tackling housing affordability. Particularly, we compare the difficulties and solutions in the two largest states: Victoria and New South Wales.
Part 4: A Familiar Story (41:06)
Utilising Jakob Madsen's history of correct economic predictions, we turn to questions of trend lines, historical context, and international comparisons.
Madsen outlines for us what signals he sees in the Australian economy and housing market that point toward possible popping of bubbles and recession.
We tackle negative equity, the growth of the ASX, bad debt and the problem with consistently low interest rates.
Why is household purchasing power decreasing and the proportion of people living paycheque to paycheque increasing while house prices go up every day? How can Australia transform its economy and what are the prospects for avoiding a recession?
The Red Line's Australian Housing Crisis Reading List:
We’ve put together some further reading for those of you looking for more resources to help you get across the Australian Housing Crisis.
Books:
No place like home: repairing Australia's housing crisis
Peter Mares
Articles/Journals:
A historical geography of housing crisis in Australia
Rae Dufty-Jones
For episode transcripts, monthly geopolitics Q&A’s, member-only videos and to support the show, check out our Patreon here: https://www.patreon.com/theredlinepodcast
This episode is dedicated to Patreon member Rob Weilend.