Some Answers in These Troubled Times

There are a couple of questions on the minds of Commercial Property Investors at the moment.

And they go something like this.

Question #1: Will Australia go into recession?

It’s most unlikely … given the underlying strength of our economy, and the relatively low level of corporate debt (compared with firms in the US & UK).

Consumer confidence should receive a strong boost from the Government guarantees for our banking system, and the RBA’s bias towards lowering interest rates.

The Government has also just announced one-off relief for pensioners and fisrt-home buyers. Plus, it will fast track some large infra-structure spending; and the promised tax cuts are soon to take effects.

Furthermore, with the falling dollar … our trading sectors are now back in business: Agriculture, Manufacturing and Education will all receive a welcome boost.

Question #2: How will Property fare?

There are a number of people who have over-committed financially — both on their Residential and Commercial properties. Or maybe, they’re just taking a “defensive” position.

As such, you will start to see some real bargains emerge in the run up to the end of this year.

Residential Property

Unlike many overseas countries, Australia’s high immigration and shortage of housing stock should underpin the Residential market.

And that’s important for these using their homes as collateral, for Commercial Property investment.

Commercial Property

The recent coordinated global action should see general confidence levels stabalise, and then start to improve over the next few months.

However, some firms may use the opportunity to trim some “dead wood” from their staff.

Retail sales actually rose in July (1.6%) and August (0.6%). And interestingly, much of that growth came from food (groceries, cafes and restaurants).

That makes sense, when you think about it.

In times of turmoil, people tend to cut back on their holidays; and eat-out more often, near to home.

And this reaction has been confirmed by international think tank, Social Intelligence Lab — in a study following events like Pearl Harbour, and the 9/11 terrorist disaster in the US.

Bottom Line: Half the world may have their economies slowing. But the developing countries are still growing, and will continue to buy: Australia’s Minerals, Europe’s machinery, Japan’s electronic goods and America’s movies.

Things may become a little slower here in Australia — but it is certainly not all doom and gloom.

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