Time to start living!

Property Club Property Market Insights

Take a look at Jade Albion!  Only 4km to Brisbane’s CBD and fourteen days left to take advantage of the vendor’s offer to approved persons, of no cash from your pocket up until Christmas 2016 and you collect the capital growth!  Act now!  Contact your Property Mentor for details on how. Click here to see a great overview of this development!

Australian Dollar and Unemployment – forcing interest rates down?

With yesterday’s rise to 6% unemployment, our unemployment rate is now the same as the US!  This breaches the RBA charter of full employment and provides further pressure to lower rates.

In the graph below, the lower panel shows the yield premium Australian 10-year notes offer over U.S. debt of similar maturity shrank to the least since 2006, while the Aussie dollar has remained resilient above 90 US cents. (Source: Malcolm Scott, Bloomberg).  Our RBA want to stimulate the economy and want 84c US.  It is now 94c US.  Our high rates are causing this high dollar.  This provides extra pressure on the RBA to lower rates.

This is why we are in a Golden Era. We never enjoyed a mining boom; the reality s that it only helped 4% of our workforce. The attractive national accounts took RBA and Treasury’s eye off the ball to assist everyday Australians – the forgotten 96%!  The unemployed went up from 4.3% to 6.0% with barely a comment from them!  Now they are both back at the wheel.  My tea leaves tell me that the unemployed and interest rates will fall, but this time (unlike in 2009) the RBA won’t kill the economic recovery by raising rates.

The result?

The media will start getting positive about the economy for a change. Infrastructure spending will come online . This will start reducing the unemployment rate. The Golden Era will dawn belatedly on the media. Prices will rise with rising consumer confidence. Inflation will return.

But you got in before the media caused the price rises…didn’t you? If you are not on the property ladder when will you be?!

Happy investing,
Kevin Young
Club Founder & Director