AUSTRALIA’S PROPERTY BOOM IS MASKING A DEEPER ECONOMIC PROBLEM
As housing drives wealth and policy debate, the real risk is an economy hooked on growth without productivity to sustain it.
3 min
For decades, Australia has leaned into its reputation as the lucky country. But luck, as it turns out, is not an economic strategy.
What once looked like resilience now appears increasingly fragile. Beneath the surface of rising property values and steady headline growth, the Australian economy is showing signs of strain that can no longer be ignored.
Recent data paints a sobering picture. Australia has recorded one of the largest declines in real household disposable income per capita among advanced economies.
Wages have failed to keep pace with inflation, meaning many Australians are working harder for less. On a per capita basis, income growth has stalled and, at times, reversed.
And yet, on paper, things still look relatively solid. GDP is growing. Unemployment remains low. But that growth is increasingly being driven by population expansion rather than productivity.
More people are contributing to output, but not necessarily improving living standards.
That distinction matters.
For years, Australia’s economic success rested on a powerful combination: a once-in-a-generation mining boom, a credit-fuelled housing market, strong migration and a property sector that rarely faltered. Between 1991 and 2020, the country avoided recession entirely, building enormous wealth in the process.
But much of that wealth is tied to property. Around two-thirds of household wealth sits in real estate, inflated by leverage and sustained by demand. It has worked, until now.
The problem is the supply side of the economy has not kept up.
Housing supply is falling behind population growth. Rental vacancies are near record lows.
Construction firms are collapsing at an elevated rate. At the same time, massive infrastructure pipelines are competing with residential projects for labour and materials, pushing costs higher and delaying delivery.
The result is a system under pressure from all angles.
Despite near full employment, productivity growth has stagnated for years. In simple terms, Australians are putting in more hours without generating more output per hour. The economy is running faster, butgoing nowhere.
Meanwhile, government spending continues to expand. Public debt is approaching $1 trillion, with spending now accounting for a record share of GDP.
The gap between spending and revenue has been filled by borrowing for decades, adding further pressure to an already stretched system.
This is where the uncomfortable question emerges.
Has Australia become too reliant on a model driven by rising property values, expanding credit and population growth?
As asset prices rise, households feel wealthier and borrow more. Banks lend more. Governments collect more revenue. Migration fuels demand. The cycle reinforces itself.
But when productivity stalls and debt outpaces real income, the system begins to depend on constant expansion just to stay stable.
It is not a collapse scenario. But it is not particularly stable either.
Nowhere is this more evident than in housing.
The National Housing Accord targets 1.2 million new homes over five years, yet current completion rates are well below that pace. With approvals falling and construction costs rising, the gap between supply and demand is widening, not narrowing.
Housing is also one of the largest contributors to inflation, with costs rising sharply across rents, construction and utilities. Yet the private sector, from small investors to major developers, is struggling to make projects stack up in the current environment.
This brings the policy debate into sharper focus.
Tax settings such as negative gearing and capital gains concessions have undoubtedly boosted demand over the past two decades. But they have also supported supply. Removing them may ease prices briefly, but risks deepening the supply shortage over time.
That is the paradox.
Policies designed to make housing more affordable can, in practice, make the shortage worse if they discourage development. The optics may appeal, but the economics are far less forgiving.
It is also worth remembering that most property investors are not institutional players. The majority own just one investment property. They are, in many cases, ordinary Australians using real estate as their primary wealth-building tool.
Undermining that system without replacing it with a viable alternative risks unintended consequences, from reduced supply to higher rents and increased inflation.
So where does that leave Australia?
At a crossroads.
The country can continue to rely on population growth and rising asset prices to drive economic activity. Or it can shift towards a model built on productivity, innovation and sustainable growth.
The latter is harder. It requires structural reform, long-term thinking and political discipline.
But it is also the only path that leads to genuine, lasting prosperity.
The question is no longer whether Australia has been lucky.
It is whether it can evolve before that luck runs out.
Paul Miron is the Co-Founder & Fund Manager of Msquared Capital.
BNW Developments has established a Sydney presence, joining Arada and Sobha Realty among the growing number of UAE developers pursuing Australian buyers and development opportunities.
Australian shares fell on Thursday as Wall Street weakness, rising oil and persistent rate concerns weighed on most of the market. The S&P/ASX 200 declined 0.72 per cent to 8,702. The All Ordinaries lost 0.66 per cent to finish at 8,897. Mining stocks were hit particularly hard, while real estate also dragged on the index. …
Continue reading “ASX falls 0.7 per cent as miners and property stocks retreat”
A vibrant 1954 Palm Springs home featuring eight colorful murals by late artist Shawn Savage is on the market for $2.295 million. The 2,237-square-foot property features bold hot-pink doors, three bedrooms, a pool, mountain views and playful interiors blending modern glamour with classic Palm Springs style.
3 min
A bold 1950s home in Palm Springs, California, adorned with eight colorful murals by the late artist Shawn Savage, is coming to market ahead of the city’s annual Modernism Week.
The white stucco home on El Camino Way, built in 1954 and recently renovated, has an asking price of $2.295 million. Its staggered facade features three playfully abstract murals on either side of double-height hot pink doors.
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The sellers are Los Angeles-based partners John Freeman and Mathieu Faure, who knew it was “the one” when they saw it after several months of searching in the winter of 2023. “It’s a happy house,” Freeman said. “We really liked the feel of the house: the uniqueness, the openness, the brightness—and the art.”
Located in the Mesa neighborhood of Palm Springs, which backs up to the San Jacinto Mountains, the 2,237-square-foot house features three bedrooms, an angled bonus room and a yard with a pool, desert mountain views and another colorful mural running alongside the pool.
“I never thought in my life I would have a house with pink doors,” said Faure, a producer at Apple TV who is originally from Paris. “It’s so colorful, it’s so different. And so Palm Springs.”
The layout of the home creates a smooth flow from the front doors through the open-plan common area—a foyer, bar, and living and dining room—into the kitchen around a fireplace wall and out to the yard. A corridor leads to a private bedroom wing, where the primary suite has floor-to-ceiling windows and the primary bath is only a tad smaller than the bedroom.
Faure has filled the home with Jonathan Adler furniture, rugs and accessories, riffing on the energetic California vibes of the house to create an aesthetic of “modern American glamour,” he said.
“It was enjoyable for me to play with different types of furniture and make this house ‘happy chic,’ as I describe it,” he said.
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“He did a fantastic job,” said Freeman, who is an attorney and consultant. “It does kind of bring a smile to my face whenever I walk into the house.”
Since the furniture and decor were chosen for the particularities of the space, the couple is open to selling them with the home. Their West Hollywood house is already furnished; the collection doesn’t match the vibes of a Houston loft they bought near family; and Faure can’t imagine these pieces in New York—where he’s lived in the past—he said.
The duo bought the Palm Springs house for $1.925 million in 2024, according to property records, and will list the home Monday. They are represented by Stewart Smith, Patrick Jordan and Kevin Stanley of Bennion Deville Homes/Luxury Portfolio International.
The previous owners had purchased the home in 2021 for $975,000 and then spent more than two years and $700,000 on the renovation, according to Realtor.com. They commissioned Savage, a local Palm Springs artist and painter known for his joyful abstract work, to decorate the home.
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Savage, who died in 2024, lived in the Coachella Valley from 2003, and his work can be found in various local institutions and is on exhibit at the Illumine Gallery in Palm Springs. “Some artists pass through a place. Shawn Savage became a part of it,” the gallery’s description states.
Unsurprisingly, the murals invite lots of friendly conversations, as well as guided tours and interested lookers, but never to a degree that it disturbed the peacefulness of their home or the neighborhood, the sellers said. “It felt like living in an art gallery, and you have the exterior that you would share with the world,” Faure explained.
The neighborhood also played a role in their decision to buy, because of its access to the hiking trails of the San Jacinto Mountains, the lack of through-roads and the neighborly environment.
“It’s a very friendly place,” Faure said.
When the Writers Festival was called off and the skies refused to clear, one weekend away turned into a rare lesson in slowing down, ice baths included.
On October 2, acclaimed chef Dan Arnold will host an exclusive evening, unveiling a Michelin-inspired menu in a rare masterclass of food, storytelling and flavour.
