It's a Good News Week for the Australian Economy

It's a Good News Week for the Australian Economy

Firstly, we had Australian unemployment falling just a touch more to 5.7%. Which, while it suggests the RBA will remain on hold with a distant next move to be a hike in a year or so, the positive impact this will have on buyer sentiment more than outweighs any rate stability risk. I say rate stability risk because we all know the official rate should have been at 1.5% for quite some time now, rather than 2.00%. The RBA remains behind the curve as they say.

There is also the continuing hope in Australia of a double dissolution election in fast approaching July. This would really get the property mark booming! It would remove a great deal of uncertainty while confirming the legitimacy of the Turnbull government.

Yet, perhaps the biggest news of all is out of China!

While a lot of people talk about China’s growth being at its slowest in 25 years, they neglect to mention that China’s economy is a whopping 30 times bigger now, than it was back then. So having grown 30 fold, this week’s release of GDP data for the first quarter at a huge +6.7% is mighty impressive. Yes, it is at the margin, just 0.1% slower than the fourth quarter of last year, but it is still a very big number and a truly strong performance.

There is also the prospect that it may well be the lowest number we see for this year. As I expect some upward acceleration in economic growth, albeit modest given the already high level, for the rest of 2016.

Supporting this view, recent monthly data for both manufacturing and the services sector have actually seen quite sharp spikes higher in activity.

Also released with the GDP data were Retail Sales up 10.5%, Industrial Output accelerating at 6.8%, and Fixed Asset Investment was a huge 10.7%. This last number suggests an ongoing, very powerful economic environment indeed.

As you can see from the above data, those who have been pointing to China being in trouble have been completely wrong. In a nutshell, the reality is one where people are still under-invested, in what is a remarkably prosperous period in history -lead by China! With Australia being a major beneficiary.

Chinese property investment in Australia is likely to continue to accelerate sharply. Best we all try to stay ahead of them? Especially as the local economy is at least stable at the moment, and most probably improving. There is plenty of upside potential, with any recent slow-down in property price gains having very likely already run its course.

Clifford Bennett International Economist

Related Posts

Don’t Just File Your Tax. Use It.

Don’t Just File Your Tax. Use It.

EOFY is coming, and most Australians are getting ready to tick the box, lodge the return, and move on. But smart investors know this isn’t just the end of a financial year — it’s a checkpoint. This is your chance to stop handing over more tax than you need to. And property could be the most powerful tool you’re not...

Are You Actually Ready to Retire? Or Just Sick of Work?

Are You Actually Ready to Retire? Or Just Sick of Work?

Retirement is not what it used to be. The old model of working full-time until 67 and then calling it quits is changing. More Australians are asking deeper questions. Am I financially ready? Do I want to stop working, or am I just tired of my current job? Do I have enough to live the life I want, or just enough to...

Refinancing Success: How One Property Investor Saved $200,000 on Their Loan

Refinancing Success: How One Property Investor Saved $200,000 on Their Loan

With interest rates still causing concern for many investors, refinancing can offer a powerful way to reduce costs and improve cash flow. A recent Property Club member case shows just how much can be saved, both monthly and over the life of a loan. Real Example: Refinancing a $450,000 Property Loan One of our...

Become a Member Today!

Our mission is to help the average Australian learn the property market dynamics and discover the amazing opportunities that exist in real estate.