In an earlier article, I gave you a bullet-point comparison of how things are NOW … compared to the early 1990s … in relation to Commercial property.
Anyway, here are some very revealing graphs — based upon figures from the RBA.
Now & Then
Back in the 1990s, the banks were burdened with a heavy corporate exposure; and interest rates were up around 18% pa.
This time around, corporate borrowing and interest rates are low; the banks are strong; and we entered the downturn with full employment.
Nevertheless, the current financial crisis had the potential to end in global bankruptcy. But things appear to have stabilized; and we are now entering a slow work-through phase.
Housing seems to be picking up and economic feedback is improving … to the point where the current June quarter may well see the economy simply moving sideways — rather than down!
Australia is probably trailing about 4 months behind the US … which (along with China) is beginning to improve. You may not easily recognise the positive signs — because of Australia’s rising unemployment, which is basically a lagging indicator.
However, today’s decision by the RBA to keep rates steady is further confirmation that we’ve most probably reached the bottom of the curve.
And the strength of the market for Melbourne Commercial under $5 million … is certainly evidence of that.
