There has been much written already about the global financial crisis.
But in layman’s terms, it occurred as a result of capital imbalances occurring throughout the world. And nowhere more so, than in America.
The principal cause can be found with the high levels of US debt-funded consumption. And in order to better understand this distortion, you might care to consider the following figures …
Predominantly, the funding for the huge US Current Account deficit has been carried by China. Hence, the delicate nature of the present relationship between these two superpowers.
h3. Australia has more than held its own
You will have heard it said that China’s continued growth has helped underpin Australia’s easy pathway through the financial crisis still affecting many other Western economies.
However, a significant part of our own economic success flowed from strong population growth over the past decade — when Australia’s numbers increased from 19.2 million to 22 million.
Much of that occurred during the last four years — when higher immigration and new births accounted for around 400,000 of these new people each year.
h3. What does this mean for Property?
While the resources boom has been kind to us, Australia’s underlying economy has also been sustained through a healthy demand for goods, services and accommodation — to meet the needs of this surge in population.
Clearly, such rapid population growth will provide challenges for both federal and state governments — in having to provide more and improved infrastructure. But it does augur well for those investors who are able to meet the growing Residential and Commercial accommodation needs of this increased population.
You may have seen some uncertainty early last year, as the financial crisis unfolded. Plus, there was a brief lull as the RBA increased interest rates; and now, as the federal government starts to unwind its incentive package.
However, the fundamentals are that supply of real estate accommodation (for both housing and offices) is now starting to lag behind a growing demand. And this will place both of these property owners back into the “driver’s seat”.
Next week, we’ll take a closer look at the Capital city Office markets around Australia.
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