Powered by MOMENTUM MEDIA
the adviser logo
Sales & Marketing

Strong signs of economic growth

by Staff Reporter10 minute read
The Adviser

Market fundamentals continue to reveal an economy that is on the road to recovery

While we are now firmly in an upward rate cycle, rising rates should not unduly impact property market activity.

More than one third of Australians are planning to buy a property within the next two years, even if interest rates hit 11 per cent, according to Mortgage Choice’s 2009 Consumer Sentiment Survey.

There is little doubt that the survey highlights growing consumer confidence. Matched with healthy retail spending data, it would appear the economy has turned a corner and is well on its way to recovery.

==
==

Retail turnover has increased markedly since this time last year (6.1 per cent), according to ABS statistics. ABS figures further show that gross earnings have increased by 1.1 per cent since last month, a 5.4 per cent rise since last August. No doubt this has helped spur on consumer spending in time for Christmas.

Housing construction is also enjoying an upswing and there has been a burst of public investment this quarter, particularly by foreign investors, which looks set to continue.

“Foreign investment will be a key growth driver over the year ahead,” Westpac’s chief economist Bill Evans said.

Foreign investment has also helped drive property prices upwards, particularly in the top end of the market, taking into account recent significant transactions in Melbourne, Perth and Sydney.

Global comparisons support the positive economic outlook, with a survey from Global Property Guide showing that out of 27 countries, Australia ranked second in real estate market recovery.

On the flipside, private non-residential building activity has lost altitude with a 7.8 per cent drop this quarter, a consequence of being hit hard by the economic crisis, according to Westpac’s CAPEX results.

Business investment is also expected to be down from last financial year – a view shared by the government in the mid-year economic and fiscal outlook. An upturn is more likely in 2010/11 as capacity lifts to more normal levels.

As for interest rate rises, Aussie Home Loans executive chairman John Symond warned that the RBA should tread carefully as Australia is not yet clear of the global financial crisis.

“The RBA needs to be very cautious in lifting rates prematurely, having regard to the ongoing uncertainty and widespread economic problems still being experienced around the world,” Mr Symond said.

default
magazine
Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more