Australian property recovery fails to boost wider economy

When Michael Jiang scored a liquor licence four years back, he had hoped it would help drive more sales at his struggling small grocery business in Sydney.

Fast forward to the present, and Jiang finds himself wrestling with new challenges as stingy consumers and price wars have done little to boost earnings in an economy growing at its slowest pace in a decade.

Moreover, even a welcome revival in the property market has only served to highlight a conundrum for policymakers, as the “wealth effect” of rising home prices has hardly been felt across the rest of the economy.

That has not only meant sales at businesses such as Jiang’s continue to run on a low boil, but it also raises the risk that already high household debt could worsen without a broader recovery the central bank is trying to engineer with lower rates.

“The liquor business is kind of my silver lining,” Jiang said of the high margin category from his corner shop in Pyrmont, an inner-city Sydney suburb.

“Without that I’d have closed down years ago,” he added, underscoring the persistent weakness in Australia’s economy even as it is set to enter a 29th straight year of recession-free growth.