Is Saving Back in Fashion?

Posted on 29. Apr, 2010 by Chris Lang in Uncategorized

Presumably as a result of the recent global turmoil, Australia's savings rate jumped to 4% of income during last year. And that is a major change from three years ago — when spending outpaced our income growth.

As we emerged from the financial scare, our savings rate peaked at 6.3% in mid-2009; and was running at around 2.3% by year's end. Nonetheless ... still well above what you saw during the past 10 years.

Recently, the RBA estimated that household wealth grew by just over 11% last year to reach around $610,000 on average. And our real disposable income grew by a respectable 3.5% as well.

Both of these are on par with the boom-time highs of 2007.

For Commercial Investors ...

Many consumers seem to have ignored the RB A's recent rate rises.

Although, with overall household debt and still very high levels ... you are likely to see spending ease, and this will then start to affect specialty retailers — like fashion, footwear and accessories.

However, most food outlets (such as grocers, cafes and restaurants) should continue to enjoy strong demand ... driven by the nation's love affair with TV shows like MasterChef.

It seems cooking and eating out are relatively low-cost pleasures everyone can enjoy — even when times are tough.