We’re halfway through the year, and let’s hope the second half of 2020 is going to be better than the first half.
That’s what we’re going to chat about in this episode of the Michael Yardney podcast, while I give you some ideas about what’s ahead.
I also chat with Pete Wargent about what’s really happening with the financial system, our housing markets, and concern about housing stress.
Hopefully, today’s episode will bring some extra clarity and certainty in today’s uncertain times.
Now that we’re halfway there
I’ve never seen a trilogy like this with:
- A global pandemic,
- Australia slipping into recession and
- Increasing geopolitical and local social unrest.
This means there’s a lot to think about … both at the macro-level affecting our country and its place in the world economy and at the micro-level with your investment or business strategy.
It’s like those jugglers at the circus, with so many plates spinning in the air at the one time.
Which ones are going to keep spinning, and which ones are going to come crashing down?
This means it’s important to keep an eye on all those spinning plates and watch out for warning signs.
Ignoring the warning signs of plates about to topple almost always ends badly.
Yet even rational adults at times revert to burying their heads in the sand trying to hide from the scary realities of what’s going on.
Of course, you can ignore reality, but you can’t ignore the consequences of ignoring reality.
Then there are the pessimists who only seem to see the downside.
And at present, they’re out in force.
These Negative Nellie’s can only see the worst happening with a major world recession.
On the other hand, there are the optimists who only see the upside … and some may get blindsided by dangers which are obvious in hindsight.
Yet over the years, I’ve realized that the secret to success is the ability to pursue the upside while keeping the downside in view so it can be managed.
Sure, there are lots of downsides if you look for them.
Which of those plates will keep spinning and which will topple?
If they topple will they break?
If so, what does that look like?
Do you have a plan?
But if you love the freedom to pursue opportunity, own property portfolio, build wealth, and retain and enjoy the fruits of your efforts, it’s hard work you’ll need to do.
So what’s ahead?
Australia’s economic outlook depends on the success or otherwise achieved by the government health authorities and communities in suppressing the spread of the virus.
If the virus is contained and the active caseload remains manageable, then more parts of the economy will reopen, and a degree of normality can return to society and the economy.
You see…there is no roadmap to follow so governments will need to quickly respond to changes in circumstances.
But most of the bright folks I’ve been following and talking with agree that Australia is in a better position than any other country in the world to work its way through the challenges ahead.
It looks like we will have a stepwise recovery as our economy opens up in stages.
Sure, some of our support mechanisms will be taken away at the end of September, with JobKeeper and mortgage holidays ending; but I can’t see the government pulling the rug out from under us.
They have spent too much time, money, energy, and publicity telling us how they are going to support us, so it’s likely the support will remain but in a more targeted fashion.
Our governments have a vested interest in keeping our real estate markets liquid and buoyant, recognizing that consumer confidence is critical for our economic recovery.
They know that the quickest ways to see consumer confidence plummeting is for people to see the value of their homes dropping.
At the same time, our banks have a vested interest in supporting our property markets.
Highlights from my chat with Pete Wargent:
- The good news is that things look a lot better in July than they did in mid-April
- When there’s a known risk, the more people talk about it, the more the impact is dampened
- The government does have the opportunity to smooth things over in September
- It’s going to be a step-wise increase, not a V-shaped recovery
- The demographics of the people most affected by the economic difficulties suggests that mortgage repayment won’t be as big a problem as initially thought
- People need to think carefully about the incentives to buy high-rise apartments or house and land packages
- Australia is predicted to do better than any other developed country’s economy going into 2021
- This means that once Australia can open again, the demand for Australian visas and work in the Australian economy is likely to be as good as it’s ever been
Links and Resources:
Metropole’s Strategic Property Plan – to help both beginning and experienced investors
Some of our favourite quotes from the show:
“It’s fairly obvious that people, businesses, markets, financial systems, and even society itself is suffering.” – Michael Yardney
“Consumers feel confident when they know that their biggest asset, their home, is secure.” – Michael Yardney
“If consumers are confident about their financial future, about the state of the Australian economy, they’re going to spend again.” – Michael Yardney
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