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.
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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 lots of good news if you care to look for it.
Here are nine 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.
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 five years.
Source: ANZ Bank
3. 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.
4. Our economy is still the envy of most developed nations, with GDP (economic growth) of 1.1% for the March quarter.
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.
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.
8. Consumer confidence is slowly rising again.
9. We’re still spending up according to the latest retail figures and that helps the economy go around.
As I see it there are more positives than negatives out there.
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!
Michael Yardney is a director of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy.