1. Last week NAB confirmed that business confidence is also rising. This is good for our economy and for job prospects.
2. The Australian sharemarket has performed remarkably well over the last year, enhancing people’s wealth, replenishing their super funds and instilling confidence in investors.
3. The world’s economic problems seem to be diminishing. China’s growth seems to be back on track with predictions of 8% growth this year. The USA is slowly working its way through its economic problems, and while Europe is still a basket case, no one seems to be worried that it will bring down the world banking system like they were last year.
4. We have record low interest rates. This means existing home owners and investors are benefiting and paying down their debt faster; while new borrowers will reap the benefits of being able to borrow more.
5. Household budgets are in good shape. Since the GFC, Australians have been saving more. Credit card debt is low and 68% of people are ahead on their mortgage payments. Our robust household balance sheets means we have more money to invest and as people hear more good news stories in the media they’ll start to put their money into property.
6. Low interest rates and less volatility in our economy make cash and interest bearing deposits unattractive investments. While some investors will look at getting into the sharemarket, many won’t forget how the volatility of equities burned them a few years ago and will look to the security of bricks and mortar.
7. After the turmoil following the GFC more Baby Boomers are keen to control their own destiny by managing their own self-managed super funds (SMSF). Rivers of cash from SMSFs are going to be flooding the real estate markets over the next few years.
8. Increasing immigration and a shortage of properties in some inner and middle ring suburbs of our capital cities will see rents continue to increase. On the one hand, this will provide investors with better yields, but it will also encourage a new group of first home buyers to get a foot on the property ladder.
9. Recently, economist Christopher Joye used the following graph in The Australian Financial Review to confirm that despite what some of the overseas reports are suggesting, Australian houses are more affordable than they have been for over a decade.