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9 reasons I’m not worried about the economy

Boy has the Australian economy received some bad press lately.

You know what I mean…

Horror budget. Consumer confidence dropping. Unemployment high. Properties unaffordable. The property market is stalling.

But is it really so bad out there?

There is no doubt that there are some issues with our economy and that our property markets have taken a well deserved breather, but there’s still lot’s of good news if you care to look for it:

Here’s 9 reasons to be positive about our future:

1. Having risen solidly in 2013, property values have stabilised over the last few months, but the latest RPData stats show overall property Australian dwelling values rose 10.1% over the last 12 months.12 month house price growth

2. Australia’s population rose by 396,000 or 1.7% last year, with net overseas migration accounting for 236,000. At this rate our population will increase by around 10% in the next 5 years.

9 reasons 73. Over 100,000 jobs have been created since the beginning of the year and unemployment is around 6.0% – not 6.5% as many were predicting.

unemployment rate

4. Our economy is still the envy of most developed nations with GDP (economic growth) of 1.1 per cent for the March quarter.

9 reasons 5

5. If you invested in the stock market you may have earned 17% over the last year including dividends. This means most super funds are also performing well.

9 reasons 4

6. Interest rates are low and are likely to remain low for another year or so as the RBA hopes to stimulate the economy by encouraging consumer spending.

7. The average household wealth is higher than it’s been in a long time. We’ve been stashing our cash saving rather than spending and our homes are worth more, as are our super funds at a time when we’ve been thrifty.

9 reasons 3

8. Consumer confidence is slowly rising again

9 reasons 2

9. We’re still spending up according to the latest retail figures and that helps the economy go around.

9 reasons

In summary:

As I see it there are more positives than negatives out there.[sam id=37 codes=’true’]

We live in a lucky country with a stable political environment (compared to many parts of the world), a sound banking system and the trends in the global economy suiting our economy.

And there’s lots more life in our capital city property markets driven by population growth, low interest rates, strong demand and rising consumer confidence. Sure growth will be lower this year than it was last year, but the type of double digit capital growth we had last year at a time of low inflation is unsustainable.

I don’t know about you, but I’m still putting my money into the property market.

It’s the old story: while the optimists and the pessimists argue whether the glass is half full or half empty, the pragmatists will drink the glass of water!

BY THE WAY…

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Remember the multi award winning team of property investment strategists at Metropole have no properties to sell, so their advice is unbiased.

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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


'9 reasons I’m not worried about the economy' have 3 comments

  1. Avatar for Property Update

    July 11, 2014 @ 11:13 am Chris

    Good summary of factors. Is a capital city residential property price rise of average 10% a positive for our overall economy when compared to (actual) inflation and real return on cash based investments? What is the purpose of residential real estate and how does it’s inordinate cost rises benefit the whole community? All of your articles lead to the same conclusions. Funny that!

    Reply

  2. Avatar for Property Update

    July 14, 2014 @ 10:44 pm Stu

    * How does point 7 ‘stashing our cash’ tally with point 9 ‘spending up’?.
    * More importantly, regarding cheering on the ever increasing population because it pushes up property prices by increasing demand … don’t forget that in Australia, the ‘ragged green circle’, all our fertile coastal land equates the size of a modest European country … ‘infinite growth is impossible in a finite world’. The chickens will come home to roost sooner or later. Please consider it

    Reply

    • Avatar for Property Update

      July 14, 2014 @ 11:01 pm Michael Yardney

      Before the GFC we were using our homes like an ATM. Then we became more frugal, so the average household budget is in good shape. More recently we’ve started spending again

      With regards to population growth – I agree this will also bring significant challenges

      Reply


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