Housing panic spreads to retail: Myer warns of slowing spending as property fears weigh on economy

The housing affordability crisis is now spilling into the broader Australian economy, with major retailer Myer reporting a significant slowdown in consumer spending. Myer's latest trading update reveals that customers are tightening their belts, a direct consequence of rising mortgage stress and falling property values. For months, housing panic has been building as the Reserve Bank of Australia (RBA) raised interest rates aggressively to combat inflation. Homeowners are now spending less on discretionary items like clothing and household goods, hitting retailers hard. Myer's chief executive noted that the retail environment has become 'the toughest in 30 years,' echoing warnings from economists about a broader economic slowdown. The key cause is the RBA's tightening cycle, which has pushed variable mortgage rates above 6%, squeezing household budgets. First-home buyers are locked out of the market, while existing homeowners face higher repayments. The ripple effects are clear: consumer confidence has dropped, and retail sales have weakened. The tradeoff is between controlling inflation and supporting economic growth. If spending continues to fall, the RBA may need to pause or even cut rates to prevent a recession. For now, households and retailers are bracing for more pain.