The Big Picture, economic and property trends you must understand - December 2021| With Pete Wargent

Australia's economy and our property markets don't operate in isolation, so I believe it's good to regularly have a look at the big picture, the macroeconomic factors affecting not just Australia's economy, but the world economy to help us understand what's ahead for us, and I do this once a month in these Big Picture Podcasts with Pete Wargent.

Since this will be our last Big Picture podcast for the year Peter and I will give a short review of what happened over the last year and our thoughts on what's ahead for the world economy, Australia's economy and our property markets.

Economic and property trends you must understand

As I look back, 2021 the year seems to have gone quickly for me, even though I know for a lot of people it has been a slow and difficult year.

It's been a great year for my business at Metropole where we help more people are ever secure their financial future through independent wealth and property advice and advocacy and its been the best year in my memory for the growth of my property portfolio, and I know for most people who owned property it's been a very good year also.

Yet I recognize that some people have experienced tough times related to their health, to their business or financially. And I'm not saying that flippantly – in most cases this was totally out of your control and it just doesn't seem fair does it?

So what's ahead for us? What will 2022 bring?

That's one of the many topics I'm keen to discuss in this month's Big Picture with economic analyst Pete Wargent.

• Lockdowns have been removed in Australia
  • However, Europe seems to be seeing a new wave of Coronavirus
    • The UK's numbers of infection have been high, but hospitalization rates are going down
    • The third set of vaccines is helping to reduce serious cases
  • The economy hasn't performed as strongly as some had predicted the beginning of the year
    • This is because of the Delta strain of coronavirus and lockdown is in Melbourne and Sydney
    • However, analysts expect growth in the December quarter not only to overtake its pre-Delta peak but to keep going.
  • The large war chests Australians have built from saving their cash will help drive the economy.
  • Now that 80 percent of Australians aged over 16 are fully vaccinated and restrictions on activity have been significantly eased, the RBA sees our economy recovering rapidly.
  • Their upgraded economic forecasts will see a buoyant environment in the lead up to the federal election we'll most likely be having in either March or May next year.
  • The RBA said that, with the economy now opening up, the momentum evident before the Delta outbreak is expected to resume.
  • Rising inflation isn't all bad
    • Rising inflation will reduce the impact of ballooning government debt.
    • At the same time, property investors will benefit from a higher range that usually comes along with higher inflation
  • In the September quarter, our current account surplus hit a record $24bn, according to the official data from the ABS, up from the only slightly less spectacular $23bn in the June quarter
  • The pandemic has shown that without students and migrants we face skills and general labor shortages across the nation
    • If the scenario of 250,000 migrants by 2023 eventuates house prices could jump about 5 percent by 2023 and rents would lift about 7 percent.
  • A number of the banks have updated their forecasts for the next few years
    • They all agree our property markets are slowing down in terms of capital growth but will still perform strongly in 2022
    • They also all suggest property values will drop in 2023.
  • It's been a surprise how strong the markets performed and APRA's sudden intervention
  • It's also been surprising that there are unusually low rental vacancies
  • It's been reported that widespread money laundering is contributing to Australia's inflated property prices
    • Australia's weak anti-money laundering policy, flaws with the corporate registry, and the lack of a beneficial ownership register all contributed to the problem

Links and Resources:

Michael Yardney

Metropole's Strategic Property Plan – to help both beginning and experienced investors

Join Michael's Property Update private Facebook group by clicking here

Pete Wargent's new Podcast

Shownotes plus more here: The Big Picture, economic and property trends you must understand - December 2021| With Pete Wargent

Some of our favourite quotes from the show:

"In general, the economies of most of the world are going to perform well next year, aren't they? So we're not operating in isolation." – Michael Yardney

"You're a migrant, I'm a migrant, in fact, most Australians are, and if it's controlled, if it brings in skilled people who are going to pay taxes and buy goods, then that's actually good for the economy." – Michael Yardney

"I'm not sure that a rise of 1% is going to be enough to put people into mortgage stress, especially if it's done slowly, over a period of time." – Michael Yardney

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