Giselle Roux on Livewire - 3 implications of the hot property market
- Rent as a proportion of income is high. Add on non-discretionary spending, such as healthcare, utilities, insurance etc., and leaves much less of a pool of discretionary.
- Retail sector is feeling this. Companies may seem cheap, but the outlook is not great until there is some income growth.
- Housing is not a productive asset, and allocation into the sector rather than corporate activity, can part-explain our low productivity growth.
- Consolidated of housing wealth leads to wider inequality (High Gini Coefficient) which is unhelpful for growth.