* Did you know that more than 400,000 jobs were created in Australia last year? Did you know that this is more than in the USA (with its huge population) for the same period?
* Did you know that Australia has had 20 years of positive growth? And did you know that no other country has been able to do that?
* Did you also know that Australia has 4.9% unemployment rate (in a world where 5% is considered full employment)?
Let me expand a little……
In the second half of this year, Queensland will be in a far different and position than it has been recently. Insurance monies from the January disasters (floods and cyclone) are coming through, monies from government infrastructure begins to flow as well as the welcomed flow-on effect from the Queensland mines once again being fully operational after the destruction of the floods.
There’s no doubt that mining (and mining services) are the driving factor of our economy right now. Macquarie Bank is now reporting that companies are expanding their staff again. I often read things about the ‘two-speed’ economy where those in mining are laughing while the rest of us aren’t, or we are experiencing a ‘patchwork’ economy. I looked into the past and found that this isn’t uncommon at all – even this decade some states have been on fire while others have been in the slow lane.
The Reserve Bank of Australia has predicted growth next year of greater than 4%. The Australian dollar is high. Australians are now saving 12.7% of their income (the highest since the 1970s). This has meant that the RBA has not yet needed another interest rate hike – in fact it has probably stalled it for some months. In the low interest rate world of the PIGS (Portugal, Ireland, Greece, Spain) their policies are restricted: interest rates have bottomed and if something happens, they can’t lower rates any further and the cost of borrowing will be high. If we have another ‘shock’ out of Europe, our Government is unlikely to find the money for another spend like it did when it handed out spending dollars – but it can reduce rates. This is something that other countries are not able to do.
Because the money hasn’t been flowing (but will again shortly) confidence was hit, probably compounded with the carbon tax scare (although I grudgingly admit that Australia is positioning itself for the time when the world adopts and trades carbon credits) and the hint of an interest rate hike hasn’t helped. However, with the money soon to be flowing again, confidence will return quickly and we will once again see the kinds of cycles of the past.
China has $1.3 trillion to spend. Chinese are now consumer oriented. India doesn’t want to be left behind (its economy was stronger than Chinas only last decade) and is now spending on infrastructure. Resource and energy companies are spending big on investments here in Australia that will last for at least 30 years. Australia will reap the benefits as it enjoys a huge resource boom. Queensland and WA are the lucky states for sure, but WA wasn’t beaten up by the floods and cyclone that we Queenslanders experienced earlier this year which delayed the benefits and stalled us for probably 6-8 months. The time is getting close. Banks are now talking of adopting ‘confident’ rather than ‘cautious’ approaches. When the commodity cycle kicks, once again the Queensland population will increase and all our property markets will improve but particularly the Sunshine Coast (which can service fly-in/fly-out for miners) will benefit and where prices took a large drop. Australia is very lucky compared to the rest of the world. It’s a time when the strong get stronger and the weak get weaker. There’s a saying that “Fortune Favours the Brave”. If we talk about the Real Estate clock – it looks a bit like this:
12 o’clock Sell Now
3 o’clock Prices Fall
6 o’clock Buy Now
9 o’clock Prices Rise.
Where are we exactly? It just about to turn its hand to 6 o’clock. And while this takes a bit of confidence: it just makes logical, economic sense to me. Perhaps it does to you too.
Jennifer Carr B.Com, MBA
Principal R&W Noosa
Kym was most professional, and did her utmost to sell the property. A real pleasure to deal with.