Australian economy 'finely poised' as borrowers feel impact of 'unnecessary' rate rises

The past two interest rate rises by the RBA were unnecessary, a new report released by Deloitte Access Economics today has said.

Lead author and Deloitte Access Economics Partner Stephen Smith said in the business outlook report that the Australian economy is now ‘finely poised’ as economic growth slows to a trickle this year, the weakest since the recession of the early 1990s, outside pandemic conditions.

“Our view remains unchanged – the additional 50 basis points of increases earlier this year were unnecessary, and have prompted a further downgrade in Australia’s growth outlook,” Smith said. “That downgrade is centred on our households, and a ‘consumer recession’ is now forecast in 2023, with household spending expected to finish the year below where it started.”

While he said many mortgage holders were in a position to weather the interest rate rises, which will mean an increase in payments of $14,000 for a $600,000 when lenders pass on the full increases, a significant group were not. He said as many as 15 percent of variable rate, owner-occupier mortgage holders could be in negative cash flow by the end of 2023.

“On these numbers, at least 300,000 Australian households may currently be experiencing negative cash flow, with mortgage repayments and essential living expenses together exceeding household disposable income,” Smith said. “That should shock all of us.”

Smith said the pressures on the construction will also continue to impact the rental market, with commencement on new dwellings expected to be the lowest in a decade.

“Construction is expected to commence on significantly fewer houses and apartments compared to previous years – in fact, Deloitte Access Economics expects that 2023 will see construction commence on the fewest dwellings in more than a decade and almost 70,000 below the level commencements recorded in 2021,” Smith said.

“On these numbers, new housing supply would just barely keep pace with population growth, let alone ease what is a critical undersupply. In short, we are building far too few dwellings and, with a myriad of supply side challenges unresolved, that is unlikely to change in the near term.”

Deloitte Access Economics has revised expectations for economic growth down to 1.5 percent for this year and just 1.2 percent for 2024.

Australian furniture brand King Living has expanded its Aura Collection with the launch of a new modular sofa designed to blend contemporary aesthetics with adaptable living.

The Aura Sofa builds on the success of the Aura Island range, first introduced in 2023, which included indoor and outdoor sofas as well as fixed and swivel occasional chairs.

The latest evolution introduces modular functionality to the collection, allowing homeowners to configure the sofa to suit a variety of spaces and uses.

As living spaces continue to evolve, particularly in urban environments where flexibility is increasingly valued, furniture designers are placing greater emphasis on products that can adapt over time.

King Living says the new Aura Sofa has been developed with this trend in mind, enabling customers to create corner, L-shaped or U-shaped layouts, while also allowing additional modules to be added as needs change.

King Living founder David King said the original Aura concept began as an exploration of sculptural design before being reimagined as a modular system.

“Aura began as an exploration of sculptural form. Now, we’ve brought modularity into that design language, giving the freedom to reimagine your space with a modular design made for flexibility,” he said.

The collection’s defining feature remains its soft, flowing silhouette, with curved forms replacing traditional angular sofa designs.

The company describes the sofa as a response to changing lifestyles, where living rooms increasingly serve multiple purposes, from entertaining guests and family gatherings to quiet reading corners and work-from-home spaces.

Its rounded profile and minimalist aesthetic are intended to enhance the flow of contemporary interiors while maximising available space. According to the company, the design is equally suited to compact apartments and larger open-plan homes.

“Today, living space is both a luxury and a constraint. Aura is our response, a purposeful design that proves when intention and fluidity converge, the result can feel both expansive and refined,” King said.

Beyond aesthetics, the new sofa incorporates several engineering features synonymous with the King Living brand.

These include the company’s Postureflex steel suspension system, extra-high pocket springs and its signature steel frame, which is backed by a 25-year warranty. The company says the design has been engineered to deliver long-term comfort and durability.

Sustainability has also been a focus of the design. Each module features a removable cover that can be professionally cleaned, repaired or replaced individually, reducing the need to replace an entire sofa and potentially extending the product’s lifespan.

The Aura Sofa is available made to order in a range of premium fabrics and European leathers, allowing customers to tailor the piece to different interior styles and colour palettes.

Designed, manufactured and sold exclusively by King Living, the Aura Sofa launched in showrooms and online early this month, marking the latest addition to the Australian company’s growing portfolio of modular furniture designs.

Australian economy ‘finely poised’ as borrowers feel impact of ‘unnecessary’ rate rises

The latest Deloitte Access Economics report predicts growth to slow to lowest levels since the recession of the early 1990s

King Living has unveiled a modular version of its Aura Sofa, bringing greater flexibility to the sculptural design collection as demand grows for furniture that can adapt to changing lifestyles.