Will we see wages grow? It appears that while unemployment is falling the figure is still rather high, sitting at around 8%. What’s more concerning is that the underemployment figure is rising and now sitting at around 13%. In March, Seek.com announced that month on month job advertisements was up 10.3% with the year-on-year figure up 75.1%. There are plenty of jobs out there to help absorb some of the unemployed. At the same time, the underemployed want more work.
Kendra Banks, Managing Director of SEEK ANZ, states that March saw the highest number of job ads posted in a month more than any time in their 23-year history. She further indicates that although job ads are up applications for jobs are down 14%. The annual wage growth while having been in a steady decline since 2011 is sitting above the annual CPI (Consumer Price Index).
Although, as Michael Yardney highlights for many of us this probably doesn’t feel like that case. The reason being, he suggests, is because non-discretionary items are increasing in costs while discretionary items are getting cheaper. In my eyes if more people are underemployed that would mean they have less disposable income for discretionary items which I could only imagine would have an adverse effect on wage growth and GDP moving forward. I am not an economist, but I found this to be interesting.
How does this affect real estate? It will likely reduce the number of buyers looking to purchase a home as property prices continue to rise outside their reach and less employment making it harder to save a fair-sized deposit and the ability to MANAGE their loan.