Australia's longest-serving treasurer warns the country's luck is beginning to run out as wages fall and consumer pessimism grows.
Peter Costello says while Australia is "far" from recession, the economy was undergoing big changes, leaving people with a sense of uncertainty about the future.
"(Australia's) luck's beginning to run out," he told a property forum in Sydney on Wednesday.
"For the first time since the 1990s, per capita incomes have stabilised in Australia - they are no longer growing.
"Young people under 50 who have lived through a period of uninterrupted rising incomes are beginning to experience something that's different."
Consumers were "anxious" and had "stopped spending".
Real wages were falling and disposable incomes had "peaked", Mr Costello said.
The former Liberal treasurer pointed out that the household savings ratio was now 10 per cent, compared with the booming 1990s when people were spending all of their wealth.
"People have closed the credit card and opened a bank account," he said.
Mr Costello said while there would be a future for manufacturing in Australia, the industry would no longer be a "mass employer" of local workers.
In more upbeat comments, Mr Costello seemed to back Treasurer Joe Hockey's optimism for the future of the property market, who on Tuesday rejected as "lazy analysis" claims it was in a bubble and risked crashing.
Mr Costello suggested Australia's strong population growth would likely continue to support the property market.
He insisted that housing was "not expensive" in Australia, compared with overseas markets.
"Building a house is comparatively cheap," he said.
"What is expensive in Australia is land.
"So we have an increasing demand but we have quite a restrictive supply of land.
"As a result, prices are high."
He blamed that on state taxes imposed on the release and transfer of land.
Mr Costello said sooner or later world economies would normalise, with the US winding back its money printing stimulatory measures and interest rates rising again.
"It could still be a good time for property if things revert to normal ... (but) there could be a fair bit of hardship that we have to go through and readjustment," he said.
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