Breaking Ground

There are times when the world seems to change, and change quickly.

Just last week for instance, the world was flood with the end being nigh notions. This time, it was how Trump would likely be impeached. We suggested as we often do, that the media furore was over-done. That Trump would remain President regardless of investigations. Notwithstanding any new major information of course. We even went as far as to say that the world would continue turning. The hide of us.

Even if the President of the USA was impeached, at any time for anything, the Vice President, Mark Pence, would probably be a step up in any case. There was no downside. As stock markets fell sharply, we saw only opportunity.

Much is the same, as we continue to highlight, with regard to the Australian property market. Any hesitation in the market is simply an opportunity to buy, and again we can only make the point that global economic, political and market events all matter to the Australian property market. Even to the local degree (Everyone seems to be increasingly absorbed by their screens, when really, they should strive to distance themselves). Getting back to basics is always a good thing, and this week that basic is that all around the world more and more economies are booming.

The Gross Domestic Product (GDP) measure used around the world for economic growth, most probably underestimates just how prosperous the world is. You see exports add to GDP, but imports detract. We live in a very different world to when these statistics were first invented. In a globalised free trade, free capital flow world, imports actually reflect the wealth of the nation concerned, and are a positive attribute of this more inter-connected world in which we live.

Germany this week, saw data for their first quarter of 2017 released. It moved up to a one year high of 0.6% for the quarter. Though this year Germany will probably run in the 3% or more economic growth range. This is important because it reflects how resurgent Europe is. Why is this important? Because China continues to boom at near 7% growth, and the USA is accelerating out of the usual first quarter slump to around 3% as well. This is a picture of the world’s three largest economies, all either doing very well, or booming.

This will mean a massive upward pressure on commodity demand, and therefore commodity prices. China just hit a record in steel production. Yes, that’s right, Australia may well be on the cusp of a fresh and highly unexpected by most commentators, new resources boom. Certainly the external sector is strong. That means wealth, and therefore interest in property, is only set to increase.

In a nutshell, as we said the US economy remains strong, Trump will remain President, Europe is resurgent and China is still booming. No wonder the US stock market is again hitting all time fresh record highs. And you know what that will mean for the property investment market in Australia.

We live in the most prosperous period in history, and in an age of freer travel and migration, Australia remains a destination of choice. Make sure you have the property portfolio you want.

Clifford Bennett