Mark Bouris predicts Australia on verge of recession


Finance guru Mark Bouris has warned there is a “big chance” Australia will slip into a recession as soon as the end of June, as cost of living pressures continue to grow.

The Yellow Brick Road Home Loans executive chairman says although the country is not yet in recession – and will not know, because of the delay in collating data, until we are in it – “large pockets” of Australia were already feeling its sting.

“I’d say the recession is right in front of us in a lot of places right now across Australia,” he told Sky News Australia.

“I think we’re a very big chance of getting a recession in this quarter, so I’m talking about by the end of June – the end of June numbers will come out at the end of July – and I think we’re going to be very close to either no growth or negative growth.”

Mr Bouris broadcast his cynical outlook as Australia’s consumer price index (CPI) – the marker of inflation – jumped to 6.8 per cent in the 12 months to April.

This latest figure is higher than the 6.3 pre cent annual rise reported in March, but below the December high of 8.4 per cent.

The most significant contributors to the increase were housing, food, transport and recreation and culture.

Rental affordability has also dropped to its lowest levels in about a decade, with low-income households’ spending at least 50 per cent of their income on rent – well above the recommended 30 per cent.

New data from ANZ and CoreLogic shored lower-income tenants in regional areas are allocating even more to rent, almost 57 per cent of their income. Even median income households were spending more 30 per cent of their income on rent.

But Mr Bouris said he was not surprised rental costs and housing keep rising, and argued that that should not factor into inflation data.

“In those inflation numbers that we keep hearing about, we have this massive rent number there – rent just keeps climbing – and rent is a massive contributor, so is the price of housing,” he told Sky News Australia.

“[It’s] a massive contributor, very heavily weighted in the inflation calculations and that’s a real problem, that should be stripped out.”

Approvals for new housing have also dropped significantly, following a one per cent decrease in March with a 8.1 per cent drop in April.

Mr Bouris said this puts more pressure on rentals, driving up rental prices, while impacting buyers with a lack of property for sale. He said it my also force more people, especially lower income-earners, to “clump together” in houses and apartments, or force more people into homelessness.

He is concerned the Reserve Bank will continue to lift interest rates if house prices remain high – because it believes the 11 rate rises in the last 12 months have not “bitten in yet” – despite the low rates of building approvals contributing to the supply-and-demand issue.

“The reason they’re paying too much for a house is not enough property out there for sale, as a result of no new approvals being made,” Mr Bouris said.

RBA governor Philip Lowe revealed to Senate Estimates on Wednesday he expects inflation to fall to its target of between two to three per cent by mid-2025.

In the grilling, he said the bank had been taking a more conservative and “fairly balanced course” because “we don’t want to disrupt the labour market by more than we can”.

“None of that means we have a tolerance for inflation to stay high for longer,” he said.

“We’re serious but we’re also doing what we can to preserve the gains in the labour market.”

The next official cash rate announcement will come on Tuesday, June 6.



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