Newspaper article The Northern Star (Lismore, Australia)

The Economy and Real Estate; Economic Indicators and How They Affect the Property Market across the Nation

Newspaper article The Northern Star (Lismore, Australia)

The Economy and Real Estate; Economic Indicators and How They Affect the Property Market across the Nation

Article excerpt

PEOPLE often ask me whatas going to happen next in the property market. Iam happy to share my thoughts and observations, but another way is to simply take a look at the key indicators of the economy.

Of course, the economy isnat the only thing affecting the market. For example, the market is also affected by social trends, such as the ageing population and more people living alone, creating higher demand for apartments.

Government incentives such as the First Home Owners Grant can also have a big impact. But the fundamental driver of the property market is the economy.

Why is this the case? Because property is an expensive item and people are not about to make major financial commitments when theyare worried about the economy. So hereas a list of economic indicators to watch.

GDP a GDP indicates our economic production as a nation, and on a per capita basis, itas a useful indicator of our standard of living. A growing GDP creates a flow-on effect to property because people will generally look to improve their standard of living as their incomes grow.

Confidence

Demand for property always drops when people are lacking confidence. Check out the monthly Westpac-Melbourne Institute Consumer Index to get a snapshot of market mood. (The equilibrium is 100.) Business confidence is equally important. When business is suffering, they stop hiring, reduce costs and even reduce prices, thereby resulting in lesser profits. They focus on the bottom line rather than further investment or expansion. When business contracts, so does the broader economy, affecting job stability and incomes.

Inflation/cost of living

Inflation or CPI gives us an idea of demand and cost of living. …

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