While far from booming, a mildly recovering residential property market, and growing residential stock constraints, may just pose some further “downside risk” for already-slowing consumer sectors’ growth rates, as the household need for greater residential fixed investment gradually grows.
In recent weeks, the question has begun to arise as to why it would be that the household sector’s consumer spending growth has become increasingly constrained, while simultaneously it would appear that residential property demand has been noticeably picking up. This would appear surprising to some, as it is the same household sector with the same frail financial situation that spends both on consumer goods and services as well as on housing. And a “partial reprioritization” in household spending may just mean that a gradually rising need for new residential properties further constrains already pressured consumer spending growth further.
Indeed, the slowing growth in real household consumption expenditure makes sense, slowed by the tapering off in real household disposable income growth since a peak of above 6% at the end of 2010, and this is expected to lead to a slower 2013 growth rate in the country’s retail sector. [… Read More … Download FNB’s Housing vs Consumption note here…]