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western countries

Be Prepared for Strong Growth in Commercial Property During 2012

Australia stands poised ready to growThe underlying fundamentals for Australia are strong.

All that’s needed is a lift in the general confidence level, for our economy to really take off.

Therefore, the trick is … not to be caught by surprise when it does! [Read more…]

Will the RBA Cut Rates Again?

 This may well be the last Interest Rate Cut
Last week’s inflation figures were certainly much better than expected.

As such, there had been considerable political pressure placed on the RBA from by the government to cut interest rates this week.

Retailers were virtually pleading with the RBA to do so. Plus, homeowners were also looking for some relief in the run up to Christmas.

However, this is probably the last interest rate cut by the RBA for quite some time. To understand why, you need to cast your mind back to when the GFC began in 2008.

RBA has a real Dilemma going forwardAt the time, business investment was falling.

This is unlikely to occur from now on — because planned mining investment (at $430 billion) is three times greater than in 2008, representing about a third of Australian’s GDP.

And overall, Australia is said to have around $900 billion of business investment in the pipeline.

Furthermore, our main trading partner (China) is now far less dependent upon Western countries for its growth.

In 2008, China’s 12% per annum growth in GDP reflected a 3% to 4% component of exports to the West. While this year’s 9.5% growth in GDP was basically driven by domestic demand — with virtually no exports involved.

Overall, there is said to be around $900 billion of business investment in the pipeline. Add to that the improved stability of Australian banks, with their reduced offshore exposure and improved domestic deposits. Plus, an increase in the Tier 1 capital ratios.

Finally you also need to remember the RBA’s cash rate has now fallen from 7.25% in 2008 to its current level of 4.5% today.

Bottom Line: Apart from the current turmoil in Europe, Australia’s underlying fundamentals are solid. And these augur well for strong growth in Commercial property over the next 5 years.

To reduce interest rates any further would only serve to artificially inflate asset prices — rather than allow the market to grow organically … based upon genuine, sustainable demand.

 

Australia’s Growth to Continue

Asian exports
Late last year, Citigroup published this chart depicting Australia’s reliance upon export markets within the Asian region.

Clearly, Australia is running well ahead of other western countries, with our exports representing over 6% of GDP to emerging Asia. And this is twice the level it was just six years ago.
[Read more…]

"Statistics Never Lie, or Do They?"

There are some interesting outcomes emerging from a wash-up of the recent financial turmoil.

Australia has fared best among the Western countries, with its unemployment rate at only 5.3% and falling. But does this now mean you’ll start to see wage pressures emerging?
[Read more…]