Crash Alert: Households Are Running Out Of Runway!

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Despite all the hopium from the property lobbyists, the truth is more households are running out of runway with regards to their finances.

It has shown up in my latest surveys, with more than half of mortgage holders now struggling with cash flow, and 70% percent of renters in the same boat.

Next Tuesday on my live show I will be walking through the detail behind these numbers. But the pressure is also showing up in other statistics. For example, the Australian Bureau of Statistics last week revealed that value of household deposit accounts decreased by $6 billion in the June quarter, with it being the first decline in 16 years.

“This was the first fall in deposit balances since the Global Financial Crisis and indicates that the household sector was tapping into cash reserves amid rising cost pressures”, the ABS said.

The decline indicates that households are ‘running’ down savings built up during the pandemic to pay for bills and loans as a result of the Reserve Bank of Australia’s (RBA) aggressive interest rate hikes to fight inflation and the overleverage into property driven by weak lending standards and high prices. Something has to give.

Meanwhile, figures released by the RBA on Friday indicate a growing number of people are using their credit cards to cover the cost of increased bills, with the stock of personal credit having risen by 1.6% in the five months to August.

It seems to me the real pressures are now painfully obvious, and some are truly running out of runway.

But note, the RBA’s forward guidance on monetary policy was unchanged, stating that “some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will continue to depend upon the data and the evolving assessment of risks.”

So, buckle up people, turbulence ahead.

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More Australians are struggling, but properties are being sold to foreigners because the aussie dollar is so weak making it relatively cheaper for foreigners to buy houses than Australians. All because politicians only care about themselves and all of us have to suffer with high rents and house prices!

DC-lwdj
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I know what'll fix it! They'll just bring in another 100, 000 immigrants (SARCASM)

jamiehoward
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It’s amazing how Long games of Monopoly last .

fullspectrumdominanc
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The Recession looks like a full blown depression coming in.Yes we have no babanas.Housing is the elephant in the room but, the powers that be don't seem to give a toss as well.

denn
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Thanks Martin, helping the majority in Australia.Badly failing economic system, as been saying for a long time, big forced changes coming, lol's.

newto
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Great video Martin❤

We are a services based economy. Consumers Cutting back on everything but essentials will fastrack unemployment when this hits.

Martin, do you have any business stress data you can share?

mysupplychain
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I always felt that the world governments didn't really like how much of a savings buffer some of us had in Australia. There always seem to be conversations around getting our savings (and super) out of our hands in some way. All that idle cash not in foreign banks ... what a waste. We are being squeezed. The inflation was intentional. The persistence of it is intentional (stagflation) and we are being bled for everything we have. This is how you own nothing ... not sure at what point you get happy about that though.

DAh-xozm
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Per capita recession, weak Aussie dollar, high taxes, out of touch Government

jameswillis
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You might need to tell those in Brisbane...
Traffic is mental (even with fuel at $2.37).
Houses are selling in days.
Houses are rising at 15% annualized.
Car sales are record levels.
Beach-side accommodation very strong over the school holidays (and freaking expensive).

Any ideas who's struggling in your surveys? Aircraft maintenance trades people perhaps?
Anyone else?

williamcrossan
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With so many companies changing to an autonomous workforce, I am hearing about a lot of angry workers hourly wages cut and hours required dramatically reduced.

bradmackie
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There have been multiple billions of dollars spent by foreign buyers buying residential property in the past 12 months alone ... so a crash will probably be minimised, but many Aussie families could be on the streets due to having to sell.

niceworkabc
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Martin, I've been watching Canada as I believe the RE shares another of similarities with Aus. There are some major cracks showing there in a market that has traditionally been up only. Do you believe we may follow suit ?

soundmoneyg
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The banks were shutting down loads of banks under the Liberal government. When is the Labor government going to bring it to a halt.

matthewkelly
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All my savings have been wasted buying gold and silver

geraldtonmint
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And it's going to get a whole lot worse. Rick Santelli spelled it out on CNBC Fast Money two days ago. Rick is the only guest on CNBC that I have any respect for his opinion and analysis.
He basically forecast much higher rates into 2030, with a possibility that the US 10 year hits 13.5 - 14% within 7 years.
That would bankrupt thousands upon thousands of mortgage holders in Australia and collapse real estate.

addictiveaussie
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Good video Martin Less dramatic video title would not harm.

TheMemeGuy
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Im not seeing anyone struggling in melbourne, brand new suvs & luxury cars are the norm. Houses in my area no matter how overinflated selling in a few days & everyone I know living the good life & buying big ticket items & overseas holidays. I have no idea how theyre all doing it with million dollar mortgages & very average salaies!

kyms
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This is great. Thanks for not taking a deep breath in between every sentence

benyameenyitzhak
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You have been saying this for few years now. The home prices are all went up.

joeyqi
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Who would have thought borrowing more than 6 times income would have consequences and the cash rate would not remain below 3% for 30 years.

Monsagen