MELBOURNE - Australians are spending at an unsustainable rate, shelling out more than they earn, economic forecaster Access Economics warned. the Chartered Accountants Business Forum on Tuesday.
According to AE director Chris Richardson, the spendfest is driven by a boom in housing prices, and Australian wealth had reached a higher per-capita peak than that experienced by the US during the dotcom boom.
"Luckily seven out of ten Australians own (or are buying) their homes," Richardson said. "While it is not healthy for the nation's wealth to be based on one element, the property market boom is considered to be more stable than the dotcom economy which the US wealth peak was based on six years ago."
"But." he warned, "if that boom peters out before housing prices are closer to fair value, profits may be squeezed and the Australian dollar could fall. That could occur if China slows or if new commodity supply began to catch commodity demand."
Richardson predicted that commodity prices would begin to slow next year and by mid-2008 copper would be half the price it is now.