What happens to the economy when the housing market cools?

Last week we discussed the sectors which would be impacted by a housing decline. In this article we discuss the implications to the economy in a housing downturn. We have seen auction clearance rates dropping in most areas recently and with more rate rises anticipated, interest in the housing market is weakening. Consumer Spending There is a direct correlation between the housing market and consumer spending. Consumer spending levels will then have an effect on the economy. When house values …

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Stocks affected in a housing decline

The Reserve Bank of Australia (RBA) this week increased the cash rate by 0.5 per cent to 0.85 per cent. The market is expecting more rate rises this year and with this forecast, demand for housing has decreased. If there is a significant housing decline, this will affect some sections on the market. Below are a list of stocks to avoid in a housing correction. Consumer discretionary Consumer discretionary stocks in furniture and appliances will be the most affected by …

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