Gail Kelly: Housing Boom Is Over

Westpac managing director Gail Kelly said it appears that the housing boom is over, adding that is unlikely that Aussies will see a similar scenario anytime soon. 

Kelly said it’s time that everyone accepts that the time of compound growth is over for good. She further said that Aussies are wiser now and that they no longer want to borrow a huge amount against their house’s equity. 

The sentiments of Westpac’s managing director are also echoed by Reserve Bank of Australia governor Glenn Stevens. He pointed out that Aussies have become ‘grumpier’ because the housing boom has ended. 

Stevens, however, said that interest rate cuts implemented recently are not aimed to spark another housing boom. He added that Australian households are more likely to save their money compared to a decade ago. 

Kelly said the behavior of Aussies can be taken as a signal that it’s time that the country returns to traditional and old-fashioned banking. 

Unions, however, said businesses should think twice before cutting wages because this will not improve the country’s productivity. Despite the boom in the mining industry, businesses should also realize that other industries are suffering.

This was echoed by Heather Ridout, board member of the Reserve Bank. 

Maritime Union of Australia secretary Paddy Crumlin also said that cutting wages may result into class warfare. He added that workers cannot be bullied to be more productive.

ACTU president Dave Oliver said that workers and employers should negotiate to arrive at a win-win agreement. He explained that unions are more than willing to enter into a mature discussion on productivity.