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rate increases

Retail Property Facing Challenges

Retail challenges.


Having weathered the recent rate increases, consumer confidence seems to have risen just a measly 0.3% during November — according to the latest Westpac/Melbourne Institute consumer sentiment index.

Households still appear to prefer paying down debt, rather than spending — with Australia’s saving level hovering around a record 10.5% of its disposable income.
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Election Year Blues?

It’s not just rising interest rates that the Rudd government will have to contend with, in the run-up to the next election.

The joy of the resources boom restarting brings with it certain unwanted side effects. What you will start to see is wage rate increases; plus the drawing away of materials and equipment, from other sectors within our economy.

Our Exporters

Our Exporters


Furthermore, the stronger Australian dollar will bring increased hardship to our tourism and manufacturing industries — who exported goods and services internationally.

Not to mention, our local businesses … who are finding it harder and harder to compete with cheaper imports.

China

China

Clearly, Australia doesn’t want to miss out on the extraordinary growth occurring in both China and India.

However, the real test of the government will be in how it oversees the insatiable demand for labour and capital by the mining sector — while not starving the rest of the economy of these same key business imports.

With the voice of trade unions becoming louder, the temptation for Rudd is to resort to government subsidies. But sadly, it is often the most vocal (rather than the most deserving) who seemed to benefit from these type of handouts.

Maybe the preferred option would be to allow the “fittest” to survive; and thereby cause of Australia’s overall productivity to rise in the process?

But then, it is an election year!

Nonetheless, the continued stronger demand bodes well for Commercial property during 2010 and beyond.

Keep Your Eye on Inflation!

Balancing Act

Balancing Act


Australia is supposed to be in the midst of a recession; and yet, underlying inflation is still running at 4% per annum.

If that’s the best we can do … what levels will inflation finally reach, once the economy moves into its recovery phase?

Strong sales have seen retailers cutting prices less than expected. And generally, other prices have held firm — because wages have not yet been affected by increases in unemployment.

On top of this, there are also serious supply constraints on the housing front, which are pushing up rentals.

h3. How will this affect things? [Read more…]