Please click the link below to view Diana Mousina’s views on the impact of falling home prices.
Key points raised are :
- declining home prices will have a negative impact on household wealth as 65% of wealth is related to housing
- lower household wealth is negative for consumer spending
- consumer spending is holding up for now thanks to high household accumulated savings, housing prepayments, a shift in spending from goods to services and lags from the impact of interest rate rises
- this will not last forever, with rising interest rates constraining household purchasing power, high inflation and poor consumer confidence
