Jul 15 • 16M

The middle isn't really that squeezed

The 'squeezed middle' is actually flush with cash, paying relatively little for their mortgages & their household incomes have grown faster than inflation since Covid; So, that means no housing crash

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Bernard Hickey and friends explore the political economy together.
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TLDR: The Opposition and some commentators are pointing to the ‘squeezed middle’ to back their arguments for middle-to-upper income tax cuts and when warning against Government or Reserve Bank moves that might cause a ‘housing crash’.

Actually, the ‘squeezed middle’ is quite plump and in no danger of some sort of forced rush-to-the-exits that would turn an expected 15% slide in house prices to anything more like a ‘crash’ of 30% to 50%. Middle-income households are in fine fettle, especially if they own their own homes, according to the latest statistics on income, mortgage costs, cash savings and household net worth.

Paid subscribers can see and hear more analysis, detail and charts below the paywall fold and in the podcast above.

Not so gloomy: Along with all the grumbling about higher prices and rising interest, some commentators have even worried aloud about the risk of mass mortgagee sales and a house price crash of 30-50%. But how squeezed is the middle, really? Photo: Lynn Grieveson / The Kākā

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