Relentlessly soaring property prices have reignited the smashed avo debate, with one executive telling young Aussies to forgo one every day item.
Soaring coffee prices have reignited the smashed avo debate, with a financial data group warning the morning cuppa may be the one thing aspiring homebuyers have to forgo if they want to put a roof over their heads.
A multitude of factors including unfavourable weather in Brazil and shipping nightmares caused wholesale coffee prices to almost double last year.
And data from the United States Department of Agriculture last month suggests the beloved bean is set to get even pricier, with world production forecast to fall this year while consumption rises.
In 2016, renowned demographer and The Australian columnist Bernard Salt wrote that “the evils of hipster cafes” were part of the reason young people struggled to purchase their first home, saying he’d “seen young people order smashed avocado with crumbed feta on five-grain toasted bread at $22 a pop and more”.
But it was the following year when property tycoon Tim Gurner hit international headlines for making a similar remark.
Now Grafa chief executive Heidi Cuthbert has waded into those same waters.
“With the price of coffee almost doubling in a year, it’s going to put pressure on the finances of urban, coffee-drinking city dwellers who are saving for a big ticket item, like a house or a car,” she said on Friday.
“The price of your next cuppa at the local coffee shop or the beans you buy at the supermarket are likely going to hit your hip pocket.”
She said the group most likely to be affected by the price rise was young people living in urban areas and already confronted with the double challenge of high city rents and rising property prices.
“Foregoing the morning brew may be a necessary sacrifice to save for a deposit,” Ms Cuthbert said.
“Every coffee you drink is pushing that dream home ever further away.”
Her comments come as new Australian Bureau of Statistics data showed the value of new loan commitments for owner-occupier housing rose 7.6 per cent in November, with the average mortgage for owner-occupier dwellings surging to an all-time high of $596,000.
“Activity in the investor market was also strong,” ABS head of finance and wealth Katherine Keenan said.
“The value of new loan commitments to investors rose 3.8 per cent, reaching a new all-time high of $10.1 billion.”
The number of new loan commitments to first home buyers rose 1.9 per cent – breaking a decline since January 2021 – but was 17.4 per cent lower compared to a year ago.
CBA Economics senior economist Kristina Clifton said the rise was surprising given some of the major lenders had been increasing fixed lending rates in recent months.
This factor combined with affordability constraints and slow population growth would create “a much softer housing market in 2022”, Ms Clifton said, with dwelling prices expected to go backwards next year.
ANZ Research senior economist Adelaide Timbrell agreed the jump in lending growth was growth “not sustainable”.
“We don’t expect to see a repeat of the very strong growth in lending that we saw in the earlier stages of the pandemic,” Ms Timbrell said.
“We expect rising interest rates to eventually trigger a material fall in lending.
“Fixed mortgage rates are already rising and could rise further if the RBA drops its quantitative easing program, which we still expect despite Omicron’s disruption of economic activity.”
CoreLogic research director Tim Lawless said on Thursday that Australia’s two biggest capital city markets, Sydney and Melbourne, could hit their peak later this year.
“It is clear that most markets have moved through a peak rate of growth,” Mr Lawless said.
“What I mean by that is the point at which markets achieved their biggest monthly growth rate.
“We saw most of the capitals moved through a peak rate of growth around March last year.
“Normally, housing growth trends will gradually slow before moving into a correction phase, which is what we are seeing at the moment.”
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